News has emerged of a very costly outcome for the BBC following its failure to defend an unfair dismissal claim brought by former chief technology officer, John Linwood. Mr Linwood was dismissed in 2013 following the disastrous failure of the Corporation’s Digital Media Initiative. Launched in 2008 it was intended to modernise production and output by transferring to a fully digital, tapeless workflow. However, after numerous problems and delays, the BBC’s contract with Siemens was terminated in 2009. It emerged that Siemens had been appointed without a tendering exercise. At the time of termination in 2009 the BBC’s losses were £38.2m but these were partially offset by a £27.5m settlement paid by Siemens.
In 2011 the BBC was criticised by the National Audit office for its mishandling of the project. Details of the sorry tale were set out in the NAO’s full report issued in January 2014. Remarkably it continued to limp along until an embarrassing press release was issued by Director of Operations Dominic Coles on 24 May 2013 which confirmed its closure once and for all. Remarkably, by then the overall losses had spiralled to £98.4m. News of the abandonment of the project coincided with the announcement that Mr Linwood had been suspended pending an external investigation. He was sacked in July 2013 and did not receive a pay out.
In January 2014, when giving evidence to the Public Accounts Committee, Mr Linwood revealed that he had brought legal proceedings against the BBC, essentially on the basis that he had been scapegoated. His claim was heard in the London Central Employment Tribunals throughout most of May and four days in June 2014, following which the unanimous decision of the Tribunal was that he was unfairly dismissed. There was a 15% finding of contributory fault.
What makes the story of renewed interest is that it has now emerged that the BBC spent nearly £500,000 on defending a claim that could have been settled for £50,000. A Freedom of Information Act request has revealed that the BBC spent £498,000 on costs, VAT and expenses, plus damages estimated at £80,000. However, an offer to settle of £50,000 had been rejected before the bulk of the legal fees were incurred.
According to the Tribunal judgment a culture of “sacrificial responsibility” at the BBC led to “avoidance strategies” and “the steering of the spotlight of blame in other directions” by those who feared that they would be associated with “a sinking ship”.
On of the most important functions of a decent employment lawyer is to manage expectations, in respect of both claimants and respondents. Claimants often feel that they should be compensated in a way which reflects the misbehaviour of the former employer. However, unlike discrimination cases which can lead to awards for “injury to feelings”, compensation for unfair dismissal is subject to a financial cap and based primarily on salary and length of service, plus loss of earnings for a limited period.
For example, Mr Linwood was on a salary package which equated to £240,000 per annum so his compensation roughly equated to four months’ pay and benefits, far less than might have been expected for the average severance deal based on such a contract. It also emphasises just what a snip the offer to settle was and why, as was subsequently proved, it should have been eagerly accepted by the BBC. However, their conduct in this case demonstrates the other side of the equation, when a potentially pragmatic approach by the employer is clouded by external factors such as, in this case, the need for a sacrificial victim.