Rachael Lloyd
Posted on 2 Mar 2015

Employment Law Update – Unfair Dismissal / Repudiatory Breach of Contract

Unfair Dismissal – Extent of Reasonable Investigation into Misconduct (Court of Appeal)

Shrestha v Genesis Housing Association Ltd [2015] EWCA Civ 94

Background

After an employer demonstrates a potentially fair reason for dismissal, the Tribunal should consider whether the employer acted reasonably in all the circumstances, in order to conclude whether the dismissal was fair.

Case law has held that a dismissal for misconduct will only be fair if, at the time of dismissal, the employer believed the employee to be guilty of misconduct, had reasonable grounds for believing the employee was guilty, and carried out as much investigation as was reasonable in all the circumstances of the case.

To have reasonable grounds for believing that an employee was guilty of misconduct, an employer must have conducted an appropriate level of investigation.

The Facts

An audit of the Claimant's mileage claims revealed that he had claimed unusually high mileage for his travel to see clients. The audit compared the mileage claimed by the Claimant against the distances for the journeys calculated by the AA route finder. The mileage claimed was consistently nearly twice as far as the distances calculated by the AA route finder.

As a result, the employer commenced a disciplinary procedure against the Claimant, alleging that he had fraudulently over-claimed mileage expenses. An investigation into the allegations was carried out and, as part of this, the mileage claimed against the same journeys carried out by the Claimant in the previous year was studied. The distances claimed by the Claimant had significantly increased.

A disciplinary hearing was held. The Claimant gave several explanations for the mileage discrepancies, such as difficulty in parking, one-way road systems and road works. The disciplinary Chair questioned the Claimant regarding two of the journeys in question but considered that it was not necessary to go through each and every journey, as they were all above the mileage suggested by the AA.

Overall, the Chair felt that the Claimant's explanations were not reasonable. The Claimant was summarily dismissed for gross misconduct. He appealed against his dismissal but it was not upheld.

The Claimant brought claims for unfair and wrongful dismissal in the Employment Tribunal but was unsuccessful. The Tribunal held that the employer had carried out a reasonable investigation and that the Chair and the appeal panel had a reasonable belief that the Claimant had claimed for mileage he had not driven. It was held to be reasonable in the circumstances for the Chair not to question the Claimant regarding each and every journey in question.

Following an unsuccessful appeal to the Employment Appeal Tribunal ('EAT'), the Claimant appealed to the Court of Appeal.

Judgment

The Claimant's appeal was dismissed. It was held that:

'to say that each line of defence must be investigated unless it is manifestly false or unarguable is to adopt too narrow an approach and to add an unwarranted gloss to the Burchell test. The investigation should be looked at as a whole when assessing the question of reasonableness.'

Tips for Employers

Although this decision does not change the previous legal position, the Court of Appeal's judgment is helpful in considering the application of the fairness test and the extent to which an employer should investigate the lines of defence put forward by an employee. It emphasises that an employer only has to carry out a reasonable investigation; it does not have to do everything possible to investigate every possible explanation put forward by an employee.

Sending Pornographic Email was Repudiatory Breach Despite Delay in Discovery

Williams v Leeds United Football Club [2015] EWHC 376 (QB)

Background

A wrongful dismissal is a dismissal in breach of contract. An employer may be able to dismiss without notice if an employee is in repudiatory breach of contract. Gross misconduct will be a repudiatory breach entitling an employer to summarily dismiss in most cases. When defending a wrongful dismissal claim, an employer can rely on facts it learned of after the dismissal.

The Facts

The Claimant worked for Leeds United Football Club from 2006 until his summary dismissal for gross misconduct on 30 July 2013.

During 2013, the Club decided to restructure and, on 23 July 2013, gave notice of redundancy to the Claimant. It stated that he was entitled to 3 months' notice. The following day, the Club wrote to the Claimant setting out two allegations of gross misconduct and inviting him to a disciplinary hearing on 29 July 2013. The allegations concerned an email that the Claimant had received on 28 March 2008 and forwarded from his work email account to a friend at another football club. The email was alleged to contain pornographic images. The disciplinary allegations were that the Claimant had stored pornographic material on Club computer equipment, forwarded that material to a person outside the Club and forwarded confidential information to his personal email account.

On 30 July 2013 the Club wrote to the Claimant informing him that he had been found guilty of the allegations, which the Club considered to be gross misconduct. He was dismissed without notice or pay in lieu of notice.

The Claimant appealed his dismissal. The Appeal Chair upheld the decision to summarily dismiss the Claimant for gross misconduct. Whilst the Chair accepted that the Claimant may not have received a copy of the Club's code of practice on internet and email use, he considered that, as a member of the senior management team, the Claimant should have known his actions were unacceptable.

The Claimant issued a claim for damages in the High Court. After proceedings had been issued and it had filed its defence, the Club discovered that, on 28 March 2008, the Claimant had also forwarded the email containing the pornographic images to two other people: a junior female employee at the Club and a male friend at another club. The Club amended its defence accordingly.

Judgment

The Court dismissed the Claimant's claim. It held that his actions in sending the email amounted to a breach of the implied term of mutual trust and confidence, such that he was in repudiatory breach of contract, entitling the Club to summarily dismiss. The Court held that, in accordance with the case of Boston Deep Sea Fishing v Ansell, the Club was entitled to rely on its discovery of further gross misconduct after the dismissal to justify its decision to dismiss.

Tips for Employers

This case is a useful reminder of the principle that employers can, in some circumstances, rely on facts it learned of after the dismissal to justify its decision.