Employment Disputes

Resolving a founder dispute

Bruce Greig
September 15, 2020

A busy start-up deals rather carelessly with a founding employee and risks being taken to an employment tribunal. How is the situation resolved?

In this situation, a busy start-up made a mess of trying to remove an under-performing employee, one of the founding team, creating an unfair dismissal situation.

They’d dismissed him without proper notice, and they’d done it by purporting to make him redundant, but without following any kind of proper redundancy consultation process. The employee-founder had, sensibly, taken some legal advice and was asking to be reinstated or compensated for unfair dismissal.

When I dig into the situation a few things became clear:

A big concern for the employee is their reputation. In particular, they wanted to continue to be credited as a founder on the company website. This is easy for the company to agree to, it costs the company nothing.

The employee also doesn’t really want to be reinstated. He knows that some of the senior team don't rate him very highly and now everyone has lawyered up, he knows there is a risk they say he isn't capable of doing the job and he just gets dismissed a little further down the line.

The employee already has another job to go to. He doesn’t want to have to work his notice, and he doesn’t want a dispute simmering in the background.

Within 24hrs of me helping to tease out these issues, the company signs a settlement agreement with the employee. They unwind the redundancy notice, agree to keep the ‘co-founder’ reference on the website, agree to announce publicly that he’s left to pursue another opportunity, and agree that he can leave immediately without working his notice. In return, he agrees to accept a termination payment somewhat less than he was contractually entitled to.

I can’t say that everyone was happy with this outcome. But everyone could live with it, and it was certainly much better than taking a chance on an employment tribunal.