Maintaining Standards - How To Fairly Dismiss An Employee In A Controlled Function

• Published date: 16 June 2020
• Author: Ms Susan Battye, Niall Esler, Eoin O'Connor, Shane Martin, Jennifer Bassett, Conor Daly and Bill Laffan
• Subject Matter: Employment and HR, Contract of Employment, Unfair/ Wrongful Dismissal
• Law Firm: Walkers

Where employees of regulated financial services providers ("RFSPs") who perform Controlled Function ("CF") roles breach the standards required of them to perform their role, dismissal may be considered a reasonable sanction, provided the employer complies with its disciplinary procedure and the principles of natural justice. RFSP employers should also have regard to the Central Bank of Ireland's ("CBI") Fitness and Probity regime.

Here we examine two recent cases of the Labour Court and Workplace Relations Commission and highlight what regulated employers should do to successfully defend unfair dismissal claims by senior employees.

Controlled Function Roles

In both cases, the employees were performing a CF role under the CBI's Fitness & Probity regime, as prescribed in the Central Bank Reform Act 2010 (Sections 20 and 22) Regulations 2011, as amended.

Employees in CF roles - including "Pre-approval Controlled Function" roles, which are a sub-set out CF roles requiring prior approval from the CBI - must abide by the CBI's Fitness & Probity Standards (the "F+P Standards"). In summary, the F+P Standards require individuals performing CF roles to be competent, capable, honest and ethical, and to act with integrity and be financially sound. Pursuant to the Central Bank Reform Act 2010, a RFSP shall not permit a person to perform a CF role unless it is satisfied on reasonable grounds that the person complies with the F+P Standards and the person has agreed to abide by the F+P Standards. Guidance issued by the CBI on the F+P Standards specifies that this is a continuing obligation and that where a RSFP becomes aware that there may be concerns over the fitness and probity of a person performing a CF role, the CBI expects that it will be investigated and that appropriate action will be taken without delay. In April 2019, the CBI issued a 'Dear CEO' letter to RFSPs which, amongst other things, cited observed shortcomings in fitness and probity compliance and restated the ongoing nature of RFSPs' due diligence obligations and specifically the obligation to notify the CBI of any potential issues regarding an individual's compliance with the F+P Standards (see previous Walkers advisory here).

Permanent TSB v Christopher Callan (2019) UD/18/227

The first of these cases, Permanent TSB v Christopher Callan, arose after a customer sought to lodge a bank draft made out to the customer and her former husband to her sole account. Permanent TSB's Cheque Handling Policy provided that all cheques and bank drafts made payable to joint payees must be lodged to a joint...