Former insurance boss gets €1.25m for unfair dismissal

Philip Smith, the former chief executive of Royal Sun Alliance (RSA) Insurance Ireland, has been awarded €1.25m for unfair dismissal.

The award was made by the Employment Appeals Tribunal yesterday and is the largest unfair dismissals compensation award ever made in Ireland.

The RSA will appeal the decision. A spokesperson for the company said: “We are extremely disappointed by the tribunal’s decision and fundamentally disagree with it. We are considering our options, but intend to appeal the judgement.”

Mr Smith — who had been earning €620,000 a year — resigned in 2013, following revelations of discrepancies in accounts.

He sued for constructive dismissal, saying he was forced out and made the “fall guy” after an increase in claims meant RSA’s reserving came in for scrutiny by the Central Bank.

During oral hearings earlier this year, Mr Smith told the tribunal that he had been suspended by an RSA senior executive in a television interview without being told in advance.

He also said that a draft investigation into him had been sent to the Central Bank, without giving him any chance to refute its allegations.

The tribunal found the RSA’s dismissal was a “fact-finding exercise” to justify a predetermined decision.

It said suspending Mr Smith on national television, in November 2013 was the equivalent of taking a “sledgehammer to his reputation”.

Smith resigned shortly after the suspension. The tribunal also agreed with Mr Smith’s assertion, during oral hearings, that a number of other executives were aware of insurance reserving practices.

“Whilst as CEO he did have responsibility to ensure that practices which could attract Central Bank criticism did not develop or continue, this practice was one that was known, and known for a very protracted period of time, by too many high-ranking company employees to lay the blame solely at the feet of the claimant,” said the tribunal.

However, RSA had argued that Mr Smith resigned when he realised that the company’s financial irregularities were about to be exposed.

It also said that he had presided over a culture of fear such that even senior subordinates would not have blown the whistle about reserving issues.

Tribunal chairman Niamh O’Carroll Kelly said the decision to dismiss Smith was probably made to appease the concerns of third parties, including shareholders and the Central Bank.

The tribunal said there was no doubt that not only the Irish operation, but RSA Group as a whole, ran into capital problems in 2013.

Despite the award, Smith will face substantial legal costs.