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Claims of constructive unfair dismissal made by two former Swansea City directors against the club have been upheld.

An employment tribunal - following a week-long hearing last December - has unanimously judged Steve Penny and Don Keefe’s claims of constructive unfair dismissal as “well founded”, with the case now listed for a future ‘remedy hearing’ where a settlement will be decided.

But claims made of age discrimination playing a part in their departures were dismissed, and the tribunal also found Mr Penny was not an employee of the football club from July 1, 2015, under the terms of a tripartite consultancy agreement between himself, Swansea City and Parc Beck Ltd.

Both men had been directors of the club and members of the board which had managed its affairs, and were involved in major decisions such as the move from the Vetch Field to the Liberty Stadium in 2005.

They had played a key role in helping to safeguard the future of the club in the wake of Tony Petty’s stint at the helm.

As part of a takeover of the club by a consortium led by American businessmen Jason Levien and Steve Kaplan in 2016, it was decided that only shareholder directors would remain on the board, meaning as non-shareholder directors both Mr Penny and Mr Keefe would have to resign from their positions.

But the men argued irrespective of any other breaches, the fact it was intended to remove them as directors was sufficient to amount to constructive dismissal.

Levien took the view the board of directors was too large and needed to be smaller to be more effective and manageable, with only those who had “skin in the game” to remain on the main board, with the right to a board seat being 5% ownership.

Having only discovered through a formal announcement that the sale was to go ahead, both men held a meeting with chairman Huw Jenkins and vice-chairman Leigh Dineen on June 7, 2016.

At this meeting, Mr Jenkins and Mr Dineen informed the claimants they were required to resign as directors under Premier League rules. No such Premier League regulation exists, which was subsequently accepted by the club during the tribunal hearing.

They indicated they would not resign as directors, and a further meeting took place on July 19, 2016, at which Mr Jenkins informed the men they were to resign from their positions as directors with immediate effect.

At this meeting Mr Penny and Mr Keefe discovered for the first time how it had been agreed as part of the sale process that the resignations of directors either without a stake in the club or a share below the 5% threshold, would be delivered prior to the sale.

Following the meeting with Mr Jenkins, lawyer Chris Farnell had a further conversation with the claimants. Tribunal documents read it is “not in dispute” they were told if they refused to resign it could put the whole takeover deal at risk, which could result in costly litigation.

The men alleged it constituted a “direct threat”, but Mr Farnell stated he was pointing out the potential consequences of their actions for all involved, not simply them.

On August 4 Mr Penny discovered that, according to documents submitted to Companies House, he and Mr Keefe had resigned as directors on July 21.

It came after minutes from a board meeting on that date, signed as being an accurate record by Mr Jenkins, were lodged as part of the documentation relating to the purchase.

They stated Mr Penny and Mr Keefe had resigned and their resignations had been accepted at the board meeting.

But they had never resigned and there had not been any such board meeting.

Documents stated Mr Penny and Mr Keefe claimed the club had “achieved by fraud what had not been able to achieve by persuasion” and that there can be “no innocent explanation”.

There was no specific explanation as to how this occurred. The club and Mr Jenkins’ mitigation cited that a wealth of documentation had been prepared in anticipation of the purchase, and being signed and supplied to Companies House in error.

This was accepted, despite how “generous” it may have been seen by the claimants to do so, the tribunal documents read.

It added: “Having seen and heard the evidence of Mr Jenkins we view it as improbable in the extreme that he was a party in a deliberate deception as alleged, and that the more likely explanation is simple error.”

Following these events Mr Penny resigned on August 9 2016, with Mr Keefe following suit on August 18, they also claimed their managerial responsibilities beyond their director duties were to be reduced.

The tribunal judged that the new role proposed would be substantially different to that the claimants had previously occupied, amount to a fundamental breach of contract entitling them to resign.

The tribunal ruled the club did not engage in any process of consultation or discussion with the claimants as to the proposal to remove them as directors, something described as “substantively unfair”. It added whilst it was accepted the club was entitled to have directors the new owners wished, Mr Penny and Mr Keefe had been directors for some 14 years, and the distinction between them and the shareholder directors was that they had not invested money in the club nor thought to have their contribution recognised by the allocation of some shareholding.

“This in our judgement should at the very least have allowed for a discussion as to whether the strict application of the respondent’s management theory might be varied in the case of the claimants,” it read.

“In our judgement it cannot be ignored that the claimants embarked on their roles as part of a process designed to save the club and had for many years that worked without remuneration, and even when remunerated had done so in general at levels far below that which might be expected for directors of what was by then a Premier League football club.

It added: “This is a very unusual, if not unique set of circumstances which required very careful thought and consideration. It is in our view a paradigm case underlining the importance of consultation and the entire absence of it in our judgement renders the dismissals unfair.”

A Swansea City spokesperson said: “The club is satisfied with the outcome of the Tribunal, which found in the club’s favour on the majority of the claims made against it by Mr Penny and Mr Keefe.

(Image: Getty Images Europe)

“The club recognise that some of our procedural issues were not fully in line with employment practice due to a lack of consultation and led to the successful claim for constructive dismissal; although the judgment clearly states that in theory the outcome to remove Mr Penny and Mr Keefe could be justified and did not inevitably have an effect on their position as employees.

“These procedural issues have already been reviewed and improved internally and will be addressed in relation to any future employment matters.

“The tribunal also rejected the allegation that the club acted in any way fraudulently in removing the claimants as Directors without their consent and had the right to appoint and remove directors following a change of majority ownership.

“The club was pleased that the tribunal found in its favour that Mr Penny was not directly employed by the football club under a consultancy agreement he drafted as a highly qualified legal practitioner to his financial benefit and, as such, substantially reduced any compensation claim.

“As expected, the age discrimination claims also failed on the basis that the Tribunal did not consider there to be sufficient evidence to substantiate the allegations. In fact, the Tribunal explicitly accepted the club’s witness statements that the reason for their removal as Directors was their lack of shareholding in the football club and not their age.

“On a personal note, the club is sad and disappointed that the matter had to come before a Tribunal. Mr Keefe and Mr Penny both served the club admirably over a lengthy period and despite the unfortunate circumstances surrounding their departure, their work will always be appreciated.”

Mr Penny and Mr Keefe declined to comment when approached by WalesOnline.