The suspension of Northumberland County Council's top official was "unlawful" and put the authority at risk of being sued, it has emerged.
There was widespread shock this summer when Chief Executive Daljit Lally OBE stepped away from her post, shortly after blowing the whistle on "significant concerns" about council business.
In August, a council spokesperson confirmed that Mrs Lally was on 'extended leave' - but declined to explain why. She returned to the role in October, again, without explanation from the council.
Now, ChronicleLive has learnt Mrs Lally had been suspended under a disciplinary process condemned as "irredeemably flawed" by a lawyer . And if the action hadn't been dropped, Northumberland taxpayers could have had to foot the bill for "unlimited damages".
Today, we can reveal:
Leaked papers, which detail the opinion sought by the council's employment appeals committee from a QC, show the committee was warned to end an ongoing disciplinary procedure against the Chief Executive "with immediate effect".
ChronicleLive understands that in a meeting on Thursday the committee agreed to end the action.
The exact claims levelled against Mrs Lally were not particularised and remain unclear, with the document stating: "[S]ome 5 months after disciplinary action was initiated, a clear and particularised set of allegations against the statutory officer does not exist." This lack of specificity made the procedure "unfair", it adds.
However, the committee was warned that what claims were set against her showed "at least some degree of overlap with the whistleblowing allegations made by the employee".
The whistleblowing claims - which included a warning of "possible bias" on the part of ex-council leader Peter Jackson "due to a possible conflicted personal relationship that he may have", as well as "significant concerns" about council development company Advance Northumberland - were made before the disciplinary process was launched, the document noted. Coun Jackson has previously denied any bias, saying in a statement via a solicitor that "all internal procedures have been followed" and that the alleged relationship related to being simply "friends" with another party.
The report added that further action against Mrs Lally "may leave the County Council, its officers and members vulnerable to the accusation that the re-commencement of disciplinary proceedings is at least in part in response to those whistleblowing allegations; which if this results in dismissal, and can be proven by the employee, could lead to unlimited damages".
The whistleblowing claims made by Mrs Lally are being separately investigated by the council, the report said.
Although dropping the proceedings was described as the lowest-risk option, Mrs Lally could have grounds to bring "whistleblowing" and "misfeasance" claims against the council whatever the committee does, the report suggested.
Mrs Lally could also have grounds to bring a "race discrimination" claim, it added.
Not only did the report state that the action launched against Mrs Lally did not meet the threshold of sufficient evidence to require independent investigation, but "no evidence to support the allegations was presented to the SAC [Staffing Appeals Committee] when it met to consider them on August 28 2020 or at any point since".
Furthermore, an independent investigation launched in response to the complaints was described in the report as "highly problematic", because the investigator did not have a clear set of allegations to investigate.
The leaked papers make it clear that ousted council leader Peter Jackson was behind the suspension.
The committee report states that while, at the time, the elected council leader had the power to suspend an officer under the Northumberland County Council constitution, this contravenes local authority law.
"The Head of Paid Services' [Chief Executive] suspension was therefore unlawful as a matter of public law," it says.
Coun Jackson was removed as leader in September, after a no confidence vote which passed when three members of his own party turned against him.
Finally, the report informs the committee that paid council staff "have been placed under considerable pressure by elected members to divulge information relating to the disciplinary and other processes" - although staff refused to hand over confidential information.
In August, a firm of external solicitors warned that those councillors who had made the complaints against Mrs Lally "should cease to have any involvement" and "should not seek to influence the process in any way". Despite this warning, complainant members continued to ask for information, the report says.
The document adds: "This situation is regrettable. It is of concern that actions by complainant members may be construed as seeking to direct or influence parts of the process; and it appears that complainant members have been provided with information relating to ongoing procedural employment matters which they should not have received.
"This has further weakened the County Council's position and is likely to put both the County Council and individual elected members at greater risk of legal action."
A spokesperson for Northumberland County Council said: "Following a meeting of the Council's Employment Appeals Committee on Thursday 21 January 2021, the Council can confirm that the disciplinary action which commenced against the Chief Executive in August 2020 would be ceased with immediate effect."
ChronicleLive put these details to former leader Peter Jackson, who said: "The outcome of the Employment Appeals Committee is clearly very disappointing, and I regret that I have received no detail of the outcome at all from the Council which leads me to believe that there has been a large degree of political bias.
"As Leader of the Council I was quite clear that I was acting on behalf of and in the best interests of the Council when I suspended the Chief Executive in August 2020."
Mr Jackson emphasises that he did not take the decision alone and that at the time the power to suspend an officer was granted to the Leader under the Northumberland County Council constitution.