Guidance for Employers on What is Classed as Gross Misconduct in the Workplace

Qualified lawyer, Nazir Khan, looks at the case: Eastland Homes Partnership Limited v Cunningham UKEAT/0272/13 and asks “what is classed as gross misconduct in the workplace?”

Gross misconduct relates to serious behaviour on the part of an employee. To determine what is, or is not, gross misconduct cannot be confined to an employer’s own analysis. No one factor is given greater weight than another and the whole context needs to be examined when determining what is gross misconduct. There are certain types of an employee’s action or behaviour which will normally amount to gross misconduct. However, there is no comprehensive list. Example of gross misconduct includes dishonesty, gross negligence, malicious damage, theft, serious breach of an organisation’s policies, fraud, and physical violence etc. The employment contract or disciplinary policy must outline examples of gross misconduct.

Relevant Law

Section 94 of the Employment Rights Act 1996 (ERA 1996) states that an employee has the right not to be unfairly dismissed by their employer. Therefore, in order to dismiss an employee fairly, an employer must establish at least one of the following reasons (s.98 ERA 1996):

• Conduct/misconduct, such as theft, alcohol use, poor discipline, continually missing work.
• Poor performance, lack of skills , injury or long illness.
• A genuine redundancy situation, for example when a business has closed or the employee’s role is no longer required due to a change in business requirements.
• An employee is unable to fulfil the statutory requirements to continue in the job, such as the loss of a driving licence to continue their job as a driver.
• Some other substantial reason, such as business reorganisation, expiry of a fixed-term contract, or an employee does not agree to accept a reasonable change in their employment contract.

Facts

Mr Cunningham (the “Claimant”) was an employee of Eastland Homes Partnership Ltd (the “Respondent”). His role was as a caretaker and he also lived on the estate with his wife. There was no recorded disciplinary violation against him, during his 32 years’ service.

During his service, the Claimant’s wife had formed a friendship with the one of the tenants, who resided on the housing estate. The tenant had made a will, which appointed the Claimant’s wife as sole executor, and bequeathed the tenant’s entire estate to the Claimant’s wife and the Claimant jointly. The tenant died in 2011.

The Respondent‘s code of conduct prevented employees from accepting gifts worth more than £50. This code of conduct also stated that any gift must be approved by the management.

The Claimant informed his employers of the will’s provisions in 2012. On this disclosure, the Respondent’s initiated an internal investigation against the Claimant for breach of the code of conduct. After a disciplinary hearing, the Claimant was dismissed, allegedly for gross misconduct, on the basis of a serious breach of trust occasioned by his non-disclosure.

The Claimant began a claim for unfair dismissal and wrongful dismissal, arguing that his dismissal as unlawful on the basis that his misconduct did not constitute gross misconduct.

Employment Tribunal (ET) decision

The ET said that the Respondent was justified in pursuing disciplinary proceedings against the Claimant, but that the Respondent had not considered the Claimant’s long-service record. It therefore held that the dismissal was unfair, unreasonable and wrongful.  However, the ET reduced the Claimant’s compensation award by 25% on the basis that the Claimant had contributed to his own dismissal through his lack of transparency.

The ET found that the Respondent had been justified in pursuing disciplinary proceedings but, given the Claimant’s employment record and length of service, any other reasonable employer would have done nothing more that give a formal warning.

The ET therefore upheld the Claimant’s claims for unfair dismissal and wrongful dismissal.

Appeal

The Respondent appealed against the ET’s decision on the basis that the tribunal had not recognised that they had characterised the conduct as gross misconduct, nor analysed whether this was reasonable in the circumstances. The main grounds of the appeal were that:

• The ET had not deeply analysed the facts of the case.
• The ET had also not properly provided the reasons for their decisions.
• There had been misdirection by the ET in relation to their conclusion under section 98(4) of the Employment Rights Act 1996 that it was unreasonable to dismiss the Claimant.

Employment Appeal Tribunal (EAT) Decision

The EAT noted that, in the context of wrongful dismissal, the ET had found that the conduct did not amount to gross misconduct. However, in the context of unfair dismissal, the ET never explained or discussed why it was unreasonable for the employer to have characterised the conduct as gross misconduct.

The EAT overturned the finding of unfair dismissal on the basis that the ET had failed to analyse what might amount to gross misconduct on the specific facts of the case.  In this case, the EAT considered how tribunals should set out their reasoning in unfair dismissal cases which involved alleged gross misconduct. The ET had not adequately explained the basis upon which it concluded that it was unreasonable for the employer to have characterised the conduct as gross misconduct.  It was the duty of the ET to assess whether the conduct in question was such as to be capable of amounting to gross misconduct, as failure to do so could give rise to an error of law.

The EAT confirmed some of the points that an employment tribunal must consider in deciding whether a dismissal for gross misconduct can be fair. Misconduct is one of the potentially fair reasons for dismissal, but the tribunal must consider the reasonableness of the employer treating that as sufficient reason to justify dismissal.

The EAT held that the ET had not considered the question correctly, and restated the points for a tribunal to follow in gross misconduct cases. A tribunal must consider whether the employee’s conduct could reasonably be regarded as amounting to gross misconduct in the circumstances of the case. The ET had not done so in this case. A basic description of gross misconduct was not enough and a more detailed consideration of the facts should have been made.

The EAT allowed the appeal and remitted the case for a complete re-hearing before a differently constituted employment tribunal.

Implications for employers

The EAT’s judgment confirms that an employer cannot simply rely on an action being described as gross misconduct in their policies to assume that it can justify summary dismissal, but must ensure that they consider whether the conduct was capable of amounting to gross misconduct under the circumstances.