Dismissal and suspension of non-executive directors

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New rules regarding the suspension and removal of non-executive directors have come into force. Mark Leach explains the legislation

Non-executive directors play an important role in the operation and governance of NHS trusts. They are appointed to provide trust boards with expertise and skills usually gained through their professional lives, as well as knowledge of the community served by the particular trust.

They are not employees of the trust and, as such, are intended to provide a measure of independence and impartiality to trust affairs that executive directors may lack.

As non-employees, they do not have the full protections provided by employment law. Their term of appointment is fixed and there are regulations in place that provide for termination in specific circumstances. 

Neutral ground

Recently, the Department of Health consulted about a "neutral ground" of suspension from office, pending an appropriate investigation and decision on whether a non-executive should be removed from office.

The result of this consultation is the Primary Care Trusts and National Health Service Trusts (membership and procedure) Amendment Regulations 2008, which came into force on 16 June.

Highlights of these amendment regulations are as follows:

• the secretary of state may suspend a board member from office while consideration is given either to their removal from office (under the existing provisions) or to whether they are disqualified from holding office (under existing provisions);

• suspension should be reviewed after three months and should not last longer than six months overall;

• however, a six-month suspension may be repeated after expiry of the first six months' suspension;

• temporary replacements may be appointed during a period of suspension. This may be important to ensure that certain trust functions can be dealt with;

• remuneration will continue to be paid during a period of suspension.

A particularly important outcome of the consultation was the amendment to the suspension criteria as originally drafted relating to "loss of public confidence". This has been modified to make a distinction between public abreaction to legitimate policy decisions of the whole board, supported by the strategic health authority, and other unacceptable reasons for loss of public or local community confidence.

The suspension and termination powers of the secretary of state are exercised through the Appointments Commission.

Will of the majority

Clearly, there is a need to protect the position of non-executives, recognising that the independence and scrutiny they provide may at times make them unpopular, particularly with their executive directors. A balance is required. On the one hand, non-executive directors need to express views and provide input without fear of removal from office. On the other hand, trust boards need to operate effectively. Sometimes relationships at board level prevent effective operation. Where this is an issue, it will invariably be desirable for the will of the majority to prevail.

In such circumstances, one would expect the Appointments Commission to act. Regulations already in existence provide for the removal of a non-executive by the Appointments Commission in various circumstances, including where the appointee no longer enjoys the confidence of the board. That can be demonstrated by the majority of the board. A period of suspension should be unnecessary in such circumstances.

Dignified resignation

Where it is clear that confidence is lost or where it is otherwise apparent that working relations between a director and the majority of the board have broken down, neither suspension nor forced termination may be appropriate first options. The director should be allowed the option of a dignified resignation and the Appointments Commission notes that this should continue to be the preferred approach. 

Where resignation is the favoured approach, this should be sought by the SHA in order to preserve the independence of the Appointments Commission should a forcible removal from office become necessary.

The ousted non-executive may have complaints about issues concerning the trust. These can be considered separately and appropriately. A period of suspension is unlikely to serve any useful purpose in such circumstances. Suspension keeps alive the prospect of the non-executive resuming his or her board duties and where the confidence of the board is lost, such prospect is, at best, remote.

The option of suspension is a useful option for the Appointment Commission but should be used sparingly.