Dishonesty in investigation report was a fundamental breach of contract.
Wrongful dismissal occurs where an employer dismisses an employee in breach of the employment contract. A summary dismissal (a dismissal without notice) will be wrongful if the employee has not committed a "repudiatory" breach of contract. A repudiatory breach by an employee is one that gives the employer the right to choose to end the contract or to affirm it. That is, where the breach is of a term which is fundamental to, or goes to the heart of, the contract. Putting it simply, the employee's conduct has to be serious enough for the employer to treat the contract as terminated.
Wrongful dismissal awards will be limited by the amount the employee would have been paid in their notice period or (if longer) the time it would have taken to carry out any contractual dismissal procedure.
The key question for a tribunal in a wrongful dismissal claim is whether the employee committed a repudiatory breach of contract and so whether the employer was entitled to dismiss the employee without notice. A recent EAT case has considered whether an employee's dishonesty about her own misconduct was a fundamental breach of contract and grounds for summary dismissal.
Case details: Human Kind Charity v Gittens
Ms Gittens was employed as an Area Manager for the predecessor organisation to Human Kind Charity (the Employer). She was responsible for a team of 30 people and a budget of £1 million. She was not a member of the senior management team, a company director or a trustee. Ms Gittens' team had the use of an IPad on which mobile data charges accrued. A bill for £8,523 in data charges was received by the Employer. Ms Gittens was asked by her line manager to carry out an investigation into how this amount had been incurred. Ms Gittens stated that she was not the right person to carry out the investigation as she had allowed the IPad to be used and that she had not been aware of the data charges accruing. She offered her resignation but was persuaded to withdraw it and to undertake the investigation.
Ms Gittens stated in the investigation report that she could not narrow down the bill charges to any one person and did not think it fair for anyone to be blamed for the bill as there had been no intentional wrongdoing. The line manager did not consider the investigation report adequate and commissioned an investigation by another person. Ms Gittens then admitted that the IPad had been in her possession when the charges had been incurred.
Ms Gittens was summarily dismissed for gross misconduct on grounds of dishonesty and the resulting breach of trust and confidence in relation to her role as a senior manager. She brought claims for wrongful dismissal (for her notice pay), unfair dismissal and race discrimination. The latter two claims were dismissed by the tribunal.
The wrongful dismissal claim was, however, upheld. The tribunal determined that Ms Gittens did not have any contractual obligation or fiduciary duty (for example as a company director) to disclose her own wrongdoing. It considered that Ms Gittens had not therefore committed a fundamental breach of contract entitling the Employer to dismiss her summarily. This was the case even though the tribunal found there was "some dishonesty" in the investigation report and that it "was not true" that the charges could not be narrowed down to one person (i.e. the claimant).
The EAT did not agree. It considered that the tribunal was wrong to focus on whether the employee had a contractual or fiduciary duty to disclose her own wrongdoing. In this case, the employee had been found to have made a dishonest statement in her investigation report. The EAT commented that there is an important distinction between an employee remaining silent about their own wrongdoing and making a positive statement which is dishonestly untrue. The EAT was clear that someone who submits a false investigation report about their own wrongdoing cannot be protected by any "right to remain silent" or a right not to incriminate oneself. The claimant's dishonesty was conduct likely to destroy or damage the relationship of mutual trust and confidence between employer and employee and so it was a fundamental breach of contract entitling the employer to dismiss without notice.
Is there an obligation for an employee to disclose their own wrongdoing?
There is no general obligation for an employee to disclose their own wrongdoing. However, the employment contract may include an express or implied duty to disclose in certain circumstances. There may, for example, be a duty to disclose any safeguarding risk to vulnerable adults or children (which would include a risk posed by the employee themselves). An example of such a case was explored in our recent article: Q v Secretary of State for Justice.
Employees in a senior position in the organisation may be found to have an implied contractual duty to act in the best interests of the organisation and so to disclose their own wrongdoing.
An employee who is also a director or a trustee will owe a fiduciary duty to the employer and will therefore have to confess their own misconduct.
What is the difference between wrongful dismissal and unfair dismissal?
It is important to note the distinction between wrongful dismissal and unfair dismissal. Wrongful dismissal is dismissal in breach of contract. There is no qualifying length of service for a wrongful dismissal claim. Unfair dismissal is dismissal in breach of the statutory right not to be unfairly dismissed, based on an examination of the reasonableness of the dismissal process and the decision to dismiss. The general rule is that unfair dismissal claims cannot be brought before the employee has two years' service, although there are a number of key exceptions to this rule.
It is possible for a tribunal to decide that a dismissal was wrongful but not unfair (as the first instance tribunal did in the above case). This is because a tribunal will apply different tests to these two claims.
The test for wrongful dismissal is an objective one. This means that it is for the tribunal to decide for itself whether the claimant breached a fundamental term of the contract and entitled the employer to terminate the contract without notice. In doing so, the tribunal can even take into consideration facts which were not available to the employer at the time of the dismissal.
The test for unfair dismissal is a subjective one. This means that the tribunal will ask whether the decision to dismiss was reasonable and (in misconduct cases) whether it was based on the employer's honest belief in the misconduct after a reasonably thorough investigation. For unfair dismissal, the tribunal is not allowed to make a judgment based on its own view of whether the employee should have been dismissed. Rather it must judge whether the employer's investigation and decision was within the band of reasonable responses of a reasonable employer. In some cases, the tribunal may consider the dismissal to have been rather harsh but still to fall within the spectrum of reasonableness.
When considering conduct dismissals, employers should (alongside ensuring the dismissal decision and process are fair and reasonable) think carefully about whether the conduct amounts to gross misconduct, that is behaviour which is likely to destroy or damage the employer's trust and confidence in the employee. Such behaviour will be a fundamental breach of contract. If the reason for dismissal does not amount to a fundamental breach, contractual or statutory notice (whichever is the longer) should be given by the employer.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.