Give and Take

Some unlucky finance chiefs get sacked before a new job even starts.
Laura CameronMarch 3, 2008

Most CFOs accept that tenures are getting shorter — either through their own choice or their employer’s — but how prepared are they for losing their job before they’ve even started it?

Siemens, the €72 billion German engineering firm under investigation in 11 countries for corruption, recently revoked the appointment of Hannes Apitzsch as CFO of its €40 billion industrial division, after it emerged that he was under investigation by public prosecutors for making questionable payments to a labour union.

Last year Bovis Lend Lease, a UK project management and construction company, withdrew its appointment of Rod Holdsworth as FD one week before he was due to start. When Mark Menhinnitt stepped in as the new CEO, he decided to manage the company from Australia, where parent company Lend Lease is based. Rather than move Holdsworth, Menhinnitt appointed Paul Walsh, the interim FD and an Australian national, to the post instead. By that time Holdsworth had resigned his position as CFO of Morrisons, a British supermarket group, and was left without a job. (Since December, he’s been interim group finance director at Acertec, a UK-based maker of engineered steel products.)

What can a CFO do in these circumstances? It is possible to seek redress in two ways, says Elaine Aarons, an employment-law partner in the London office of Withers. One is to prove the company was negligent in making the appointment or that there is breach of an implied contract; the other is to file a discrimination suit at an employment tribunal.

It is difficult to apply either claim to Apitzsch’s case because the criminal probes constitute special circumstances. But for CFOs in a position similar to Holdsworth’s, Aarons says there is potential for taking a company to a tribunal for discriminating on the basis of nationality.

Although employment contracts are typically negotiated before the job starts, Aarons has never seen a contract that covers a pre-employment termination. But if the job market tightens as the economy worsens, Aarons reckons employees might be more likely to seek compensation under these circumstances.

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