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Disciplinary investigations: must an employer investigate every line of defence offered by an employee?

By: Amanda Steadman

Submitted by Firm:
Addleshaw Goddard
Firm Contacts:
Michael Leftley, Sarah Harrop
Article Type:
Legal Article
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The Court of Appeal has offered guidance on the scope of disciplinary investigations. In Shrestha v Genesis Housing Association Limited the Court upheld the decision of an Employment Tribunal that an employer's disciplinary investigation was reasonable in circumstances were it declined to carry out further investigations in response to the employee's lines of defence. The Court concluded that it is not always necessary for employers to investigate every explanation offered by the employee. Rather, the focus should be on whether the overall process is reasonable.

Legal background

An essential feature of a fair misconduct dismissal is that the employer is able to show that it has acted reasonably in treating the misconduct as a sufficient reason for dismissal. This requires the employer to follow a fair procedure prior to the dismissal. The correct approach here was laid down in the case of British Home Stores v Burchell, 1980 (Burchell), which provided that, at the time of the dismissal, the employer must:

  • believe that the employee is guilty of misconduct;
  • have reasonable grounds for the belief; and
  • at the point it formed that belief, have carried out as much investigation as was reasonable in all the circumstances of the case.

Facts

The employee's role required him to travel by car to see clients at their homes and he was entitled to claim expenses for the mileage covered. In 2011, the employee sought payment from his employer of an "essential car user allowance", worth £1,000 a year, which was paid on top of the mileage expenses where an employee drove at least 2,500 miles in a financial year. This claim aroused suspicion as the employee had not reached this level of mileage in previous years.

This led to his employer conducting an audit of his expenses claims for a three-month period in 2011. The audit revealed that the mileages claimed were consistently much higher than the routes recommended by the AA route-finder tool and higher than the mileage claimed by the employee for the same journeys in the previous year. The employee's explanation for this was that he incurred higher mileages due to a number of factors including difficulty in parking, one-way road systems, and road works which caused closures or diversions. These explanations were rejected by the employer, who considered the explanation simply did not stack up.

It was decided that the employee had been fraudulently over-claiming his mileage expenses and he was dismissed for gross misconduct. The employee appealed, reiterating his explanation for the increased mileage and adding that at one point he was required to drive part way on a dual carriage way to reach a client's house. However, the decision to dismiss was upheld on appeal, with the appeal panel concluding that there was no viable explanation why every journey examined was consistently higher than the AA-estimated mileage. The employee brought claims for unfair and wrongful dismissal in the Employment Tribunal.

Employment Tribunal decision

The employee argued that the employer had failed to meet the standard required by the Burchell test. In particular, the employer:

  • had failed to ask the employee for an explanation about every single journey he had taken and, instead, discussed only two; and
  • did not sufficiently probe the employee's explanation about parking problems, one-way systems and road works. It was suggested that the employer could have taken the step of recreating some of the journeys.

The employer's position was that it was unnecessary to discuss every journey with the employee on the basis that every single journey made was above the AA-suggested mileage and it was not plausible that there was a legitimate explanation for each and every journey. The employer also rejected the suggestion that it should have recreated the journeys, arguing it would not have been possible to recreate the same conditions at a later date. In any event: (i) the AA route-planner already took account of one-way systems; and (ii) the employee was familiar with the parking restrictions and it was implausible that someone would park so far away from their destination that it would take them longer to walk from the parking place than to have walked from the employer's office. Although it was accepted that road closures could account for some delay, it was not considered plausible that this would account for every single discrepancy.

The Tribunal found in favour of the employer, holding that they behaved reasonably when deciding not to undertake any further investigatory steps. The employee's appeal was also dismissed by the EAT.

Court of Appeal decision

The employee appealed again to the Court of Appeal. The primary ground of appeal was that the Tribunal went wrong by focussing on what the employer did do, without considering how the overall reasonableness was affected by what it did not do. His position was that where an employee has raised several lines of defence, then the employer must investigate each of them, unless they are manifestly false or unarguable.

The Court rejected this argument stating that a requirement that each line of defence must be investigated was to adopt too narrow an approach and added "an unwarranted gloss to the Burchell test". Instead, the investigation should be looked at as a whole when assessing the question of reasonableness. This requires an employer to consider any defence offered by the employee. However, the question of whether it is necessary to carry out further investigations in light of those defences will depend on the overall circumstances.

The Court concluded that the Employment Tribunal judge had considered whether a reasonable investigation had been carried out. She decided there had been and this was a finding that was properly open to her.

Comment

This is helpful decision and should reassure employers that they are entitled to draw a line under the investigation process in appropriate circumstances. However, it should be remembered that it will only be safe to take this approach where the evidence against the employee is highly persuasive and the explanations offered by the employee do not offer a plausible alternative version of events. Many cases will not be quite so clear-cut and, where this is the case, it would usually be necessary to conduct further investigations to demonstrate that the overall process was reasonable.

Shrestha v Genesis Housing Association Ltd