Kath Harmeston / Co-op Employment Tribunal (part 2) – a Partial Victory

Continuing Marie-Claire Kidd's report on the Kath Harmeston / Co-op employment tribunal case - part 1 was here.

In the tribunal, Harmeston exposed Pippa Wicks’ (the acting COO at the Co-op) potential conflict of interest as interim chief operating officer and at the same time one of its most highly paid external consultants, and shed light on a close relationship between Richard Pennycook, the CEO, and AlixPartners, the Group’s top  consultancy supplier, of which Wicks is a Managing Director.

Harmeston accused Mr Pennycook of directly recruiting consultants on inflated terms and Mrs Wicks of operating a “land and expand” strategy for AlixPartners, which charged the Group £8m in 2013. Ms Harmeston negotiated a 20% pay cut with the Group’s next highest paid consultancy, Boston Consulting Group.

But contrary to Ms Harmeston’s claims, the panel found the Group’s executive were acting in the company’s best interests by bringing in highly paid consultants at short notice. They were rightly prioritising restructuring of the Group over Harmeston’s drive for procurement excellence, its verdict says.

Mr Pennycook said in his evidence he had not followed procurement policy during the financial crisis, but stressed he had authority from the board. He admitted directly hiring AlixPartners consultants including Mrs Wicks, Glen Fietta, who worked on renegotiating the Group’s finances for £615 an hour, and Kevin Doran.

“The Co-operative was a burning building and when your building is on fire you pick up the phone to the fire brigade,” he told the tribunal. “AlixPartners was the fire brigade.” Going through the procurement department would have been like putting the fire-fighting work out to tender, he said, adding that a procurement function was not a legal requirement.

The judgement includes an 11-point “missing information list”, detailing the things Ms Harmeston did not write or say to her colleagues, but which would have protected her disclosures if she had, making her a whistleblower and aiding her unfair dismissal claim.

It includes the lack of any assertion that the executive was knowingly tolerating bad procurement practice or failing in their fiduciary duty - their legal duty to act in members’ interests. There was no statement from Ms Harmeston that anyone had committed or was likely to commit a crime, or had breached or was likely to breach the Group’s rules or policy.

Because of all this it is unlikely the damages Ms Harmeston will receive will amount to anything near the £5.2m in damages she filed for. Nevertheless, her lawyers are hailing a victory because the verdict gives her whistleblower status, albeit on one relatively minor count, that payment of her expenses was delayed. Carl Moran, employment lawyer at JMW Solicitors said: “The employment tribunal agreed that Ms Harmeston was, in fact, the subject of detrimental treatment by the Co-operative Group Limited after making protected disclosures.

“Ms Harmeston is naturally disappointed with the ruling that her dismissal was not unfair.  However, Ms Harmeston is pleased ... that she is now entitled to receive damages.”

The Group released a contradictory statement on publication of the verdict. It said the court had ruled it had not unfairly dismissed Ms Harmeston, nor subjected her to any other detriment on the grounds that she made protected disclosures, but it also admitted the tribunal had upheld that the detriment relating to unpaid expenses was related to Ms Harmeston’s whistleblowing.

“We are glad that the tribunal has supported our view. We fought this action because it was the right thing to do and in the interests of our members,” it said.

The tribunal will hold a further hearing to determine what remedies Ms Harmeston is now entitled to. It has yet to decide whether her single protected disclosure was made in bad faith and, if so, whether compensation should be reduced accordingly.  It will also consider whether she sustained personal injury because the Group withheld her expenses. She waited almost eight months for full payment of £15,000 and incurred legal costs of £9,000 pursuing this.

(We will have the final part of the report here soon).

First Voice

  1. Andrew Moorhouse:

    Interesting story.

    Co-Op indeed was a burning building, but I wouldn’t suggest £8m is an excessive amount to spend on a consultancy specialising in finanacial advisory services and “Turnaround & Restructuring”

    As for non-compliance with procurement policy, for sure that’s at the bottom end of the scale, but surely a procurement leader would see this as an opportunity to get stuck in and not make public disclosures complaining about this.

    I’m curious to understand who these disclosures were made to; was it a Red Top newspaper? Seems like a stupid move if you are 8-weeks into the job.

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