Shrestha v Genesis Housing Association [2015] EWCA Civ 94

Why care?

A dismissal will be unfair if, despite being for one of the five fair statutory reasons for dismissal, the employer has not acted reasonably in all the circumstances – which must include following a fair procedure in dismissing the employee.

The Burchell test (from British Home Stores Ltd v Burchell (1978)) holds that a misconduct dismissal is only fair if:

  • The employer believed the employee to be guilty of misconduct
  • The employer had reasonable grounds for that belief
  • At the time it held that belief, the employer has carried out as much investigation as is reasonable in all the circumstances.

In this case, the extent of the employer's investigation into misconduct allegations was challenged by the employee.

The case

The Claimant's job included travelling to clients' homes. He used his own car to do so and then claimed expenses for the mileage travelled, giving the readings from his car's odometer at the start and end of each journey.

Following a three months long audit of his expense claims, the Respondent noticed his mileage was unusually high and consistently nearly twice as far as the AA route finder website's calculations.

The Respondent began disciplinary proceedings and an investigation was carried out which showed that the Claimant's mileage claims were significantly more than those he had made for the same journeys the previous year. The AA mileage figures were double-checked against the RAC's website, which gave similar results. At the disciplinary hearing, the Claimant gave several explanations for the differences including difficulty in parking, one-way streets and road works. The chair of the disciplinary hearing, Mr East, questioned the Claimant about two of the journeys but did not consider it necessary to go through each journey with him, because all the journeys were significantly above the AA and RAC's suggested mileage and it was not plausible that each claim had a legitimate explanation. Mr East concluded that:

  • If parking was the issue, then the Claimant should have learned the best places to park as he made the same journeys several times
  • The Claimant's mileage claims were so large that, if finding a parking space was the issue, he would have parked so far away from his destination that it would have been further to walk from where he had parked his car than if he simply walked from the office
  • The AA (and RAC) route-finders include one-way systems in their calculations
  • Road closures might affect some, but not every, journey.

The Claimant was dismissed for gross misconduct and his appeal was not upheld.  His claims for unfair and wrongful dismissal were rejected, the Employment Tribunal finding that the Respondent's investigation was reasonable and both Mr East and the appeal panel held a reasonable belief that the Claimant had made false mileage claims. The Tribunal disagreed with the Claimant's argument that Mr East should have attempted to recreate each journey whilst investigating, since the circumstances that day could not be replicated.

The Court of Appeal unanimously dismissed the Claimant's appeal. An employer must consider the defence of the employee to any allegations against him, but the extent to which that defence should be investigated will depend on the circumstances of the case. Richards LJ said that "The investigation should be looked at as a whole when assessing the question of reasonableness". He rejected the Claimant's suggestions that the Respondent should have telephoned the local authority to find out when residents' parking bays were introduced, and to ask whether road works had been in place on certain days, as they had not been raised before the employment tribunal. In any event, such calls were not necessary in the circumstances for the investigation to have been reasonable. The tribunal had been entitled to conclude, as it did, that it was not realistic for the Respondent to try to recreate the journeys travelled.

The Employment Tribunal had applied the Burchell test correctly and was entitled to reach the conclusion a reasonable investigation had been carried out.

What to take away?

The Court of Appeal's decision is helpful for employers, showing that the extent of the investigation will depend upon the circumstances of the case and that the investigation will be looked at as a whole when assessing its reasonableness. "Reasonableness" does not require the employer to do everything possible to investigate every possible defence put forward by the employee. In cases such as this, where a detailed analysis of each and every journey, road works and traffic jams included, the employer could otherwise be bogged down in a time-consuming investigation which would come eventually to the same outcome. The case has clarified employers need not investigate further where:

  • to do so would add little or nothing to the existing evidence
  • even if the employee was telling the truth in that particular aspect, it would make no difference to his overall position
  • practical difficulties make a meaningful investigation impossible (such as witnesses who are no longer available)  

An employer who does not take up the employee's suggestions of how the investigation should be carried out should explain why this decision was taken, in order to demonstrate its reasonableness.