Kath Harmeston / Co-op Employment Tribunal – the Definitive Story

A couple of weeks ago, the employment tribunal hearing Kath Harmeston’s case against the Co-op, where she was employed as Procurement Director for just a few months, finally returned its judgement.  Harmeston failed to prove that she was fired because of her “whistle-blowing” about the Co-op's procurement practices, but she did get some small consolation in that the judge agreed her expense payments were delayed for that reason. But she is likely to get just a small damages payment as opposed to the millions she was seeking.

The case has some interesting ramifications for senior procurement leaders, and we want to explore those further. But first, this week we will be featuring an exclusive summary of the case from Marie-Claire Kidd. She is a freelance journalist who works for the Co-operative News amongst other publications, and she spent more time in court listening to this case that pretty much anyone else. We’ll have three installments from her this week, and then next week we will provide some of our own analysis around the lessons that senior professionals might want to take away from this case.


Kath Harmeston versus the Co-op; Cultural Divide, Ethics, or Management Failures?

The Co-operative Group won its legal battle against a former director who claimed she was sacked because she exposed malpractice among its executive. Manchester Employment Tribunal found that the Co-op did not unfairly dismiss procurement chief Kath Harmeston.

But it did rule that it deliberately failed to pay her expenses within a reasonable period due to the information she disclosed. Thus she achieves whistleblower status in this one, relatively minor instance.

The tribunal dismissed 15 other claims that Ms Harmeston's disclosures led to mistreatment. She claimed the Group’s executive were looking for reasons to fire her and that her colleagues had assigned her a codename, ‘Wimbledon’, in an attempt to avoid their obligations under the Data Protection Act.

Chief executive Richard Pennycook had “sidelined and avoided” her. Meanwhile, Chief Operating Officer Pippa Wicks, her line manager, had according to Harmeston given her permission to recruit contractors Silver Lining Partners (SLP), only to later deny this - an episode investigated in a disciplinary hearing and which informed the Group’s decision to suspend and dismiss Ms Harmeston.

The panel, led by Judge Kenderik Horne, ruled that while some, if not all, of these detriments occurred, they were not influenced by Ms Harmeston’s self-proclaimed whistleblowing. Rather the Group “wanted to encourage, not punish the claimant’s disclosures”, not least her drive to reduce excessive spending on consultants. “The executive wanted the claimant to have its backing to make radical changes to procurement practice at all levels,” the verdict says.

Ms Harmeston was headhunted from the Royal Mail Group and joined the Co-op in April 2014, charged with reducing spending on goods not for resale. She lasted just 10 weeks in the post.

She said her reputation was dragged through the mud after she made public interest disclosures about “endemic” procurement non-compliance at her new employer. “My dismissal and the manner in which it was conducted could lead one to believe that I had committed some very serious acts,” she said. The Group argued her claims were an attempt to mask her own serious misconduct and she was sacked because it had lost trust in her.

As the verdict points out, during the Co-op’s “rescue phase” in 2013, it was common practice for the executive to bring in contractors and consultants at short notice and high cost. But the verdict also acknowledges the Group needed to reduce its cost base, including £952m of goods not for resale spent among hundreds of suppliers in 2013.

Ms Harmeston said the Group was seen by suppliers as weak and ripe for exploitation. She told her new employer it could save £161m in goods not for resale by involving the procurement team and increasing competition. Some saw that estimate as unrealistic and her replacement Kevin Doran later estimated savings of £45m were more realistic.

Goods not for resale spend was 70% non-compliant with Group policy and this was “led from the top”, she told the court. The business was “haemorrhaging money” on management consultants, paying up to £8m extra in 2013 due to non-compliance with its own policies, according to Harmeston.

Marie-Claire Kidd

(Tune in tomorrow for part 2).


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