Entity regulation, employment and ethics – getting it right

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As we come out of all the restrictions of Covid-19, the legal sector will collectively look back to the office and, finally, begin the process of putting in the rearview mirror of an extremely difficult 18 months.

As the practices regulated by the SRA fell victim to the pandemic, it has been inspiring to see how the sector has, in general, adapted, survived and prospered under unforeseen and unprecedented circumstances.

A recent labor court case, however, highlighted the realities and challenges the pandemic has posed not only for businesses, but also the impact it has had on people working in the industry who have lost. their employment accordingly. The case highlighted the importance of ethical decision-making by employers in general, but more so in the context of Covid. It is also a timely reminder of the regulator’s determination to look to entities for accountability when they allow or foster an unethical environment to dictate these decisions.

What was it ?

The case was brought by a former trainee lawyer, G, against her former employer, N. G claimed that N unlawfully dismissed her in March 2020 for asserting her statutory right to her salary. N had paid G’s annual salary of £ 14,000 erratically since G joined the company in January 2019. As of March 2020, this had sometimes prevented G from paying even her bus ticket as well as her internet bills at home .

When the company closed its offices and forced G to work from home due to the pandemic, G found herself unable to send documents to her supervisors precisely because she couldn’t pay those bills. The result was that she missed a deadline to submit her work on March 13, 2020. Four days after G emailed company management about the persistent shortfall in her compensation and asked her when she would be paid in full, the company fired her – on the first day of official nationwide lockdown – citing her inability to send the job as a performance issue justifying the dismissal and also questioning her attitude, alleging complaints unauthorized leave periods.

In court, the judge ruled in favor of G, saying the company had made a “confused and contradictory statement” of the reasons for the dismissal, the main reasons for the dismissal being in fact G’s complaint about unpaid wages. The judge also found that the company only categorized the leave as unauthorized after the event. G received over £ 14,000.

Why is this important?

This unfortunate case highlights some essential points about the nature of the employment relationship, but also less obvious points about how these can translate into regulatory problems for companies, although it should be noted that there is no known regulatory aspect in this particular case.

All employers have an obligation to respect labor law in their dealings with employees. For a layman of labor law like myself, the most fundamental of these is surely making sure that employees are paid for their work. Here, it seems, N may have struggled to meet this basic commitment even before the pandemic hit and certainly before it could realistically have a significant economic impact. But it’s hard to believe that, given that the layoff came on the first day of the full nationwide lockdown, there might not have been any forward-looking mental math, at least, as to the likely financial implications for the company. a period of forced foreclosure and the difficult decisions that had to be made to mitigate the risks already known to the company at that time.

If this is indeed the case, it is unlikely that N was the only company to have found itself in this position, either at the start of the lockdown or since. Difficult workforce decisions will have been a recurring feature of partnership and leadership meetings over the past year, but it is how these decisions, with their very real human implications, have been handled that is most important. relevant from the perspective of ethical decision-making and the regulation of lawyers.

What does this mean for the rest of us?

The standards and regulations of the Solicitors Regulation Authority place professional ethics and the exercise of professional judgment at the very heart of its regulatory model, recalibrated in November 2019.

What is more, the demands of ethical decision-making are not limited to individual conduct but apply with equal force to law firms and the way they are run. For compliance officers, law firm directors and regulatory compliance lawyers, the significance of this is that it is no longer enough for companies to behave legally: they must also behave ethically, including included in their employment practices.

The working relationship is a curious interdependent relationship that is both loaded with human significance and highly emotionally charged. It is by its very nature unbalanced and susceptible to mistakes in exploitation. An employer concerned with using these realities to their advantage can easily become an unreasonable or irresponsible employer while acting within the law. The implications of these factors for ethical decision making are clear and all the more magnified in the circumstances of the past 15 months.

What about the SRA?

It is therefore timely to bear in mind the regulator’s stated position that, when opening an SRA investigation into allegations of professional misconduct, it will examine the “culture” of the practice where the alleged misconduct took place. as a relevant consideration. in its right. When these companies fail to properly plan for the well-being of their employees, instill toxic environments, or demonstrate unethical employment practices, the SRA will look to entities as much as individuals for answers.

In the G v N case, one implication of the tribunal’s findings – including the fact that he preferred G’s testimony over N’s ​​on key points – is that he perhaps could have done things better. from a regulatory point of view as well as from a labor law point of view. It seems reasonably clear that the court found the company’s evidence of its employment practices unconvincing at best, implying that this is because the employer may have sought to exploit the situation with the pandemic to dispose of G on an unsustainable premise. There is no direct suggestion that she found the company’s evidence to be misleading, but it clearly was not considered to be as reliable as the other evidence available to her. In the first case, the regulatory implications would, of course, have been severe.

And so…

While the industry’s success in navigating the largely intact pandemic is cause for celebration, the human cost for many, like G, cannot and should not be forgotten. There will likely be many other unreported cases where similar facts have unfolded, making the case a timely reminder of not only the importance of ensuring that employment practices are humane and ethical, but also that the cost of the pandemic should not be measured in the number of businesses lost alone. It should also take into account aspiring members of the profession vulnerable to the whims of corporate employers who are fighting for their lives whose careers and career development could have been seen as ancillary and not a central consideration in the pursuit of a sustainable practice through the pandemic.

A version of this article first appeared in the Solicitor’s Journal August 2021 edition (Volume 164 n ° 7)


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