An employer who suspects that an employee has committed a repudiatory breach of contract should either begin the disciplinary process without delay or expressly reserve its position regarding future disciplinary proceedings. A failure to do either, for example because the employee is off sick, could prevent the employer from subsequently relying on the breach to justify dismissal.
Here an employee who had given notice of resignation went off sick with stress after the employer accused him of lying about whether his new job would involve competition with the employer. The employer had not started any disciplinary investigation at that point and made no mention of the issue until the employee returned to work two weeks later. The employer's failure to reserve its position was treated as affirming the contract and prevented it from relying on the lies to justify the subsequent dismissal. In this situation an employee may be able to claim damages for wrongful dismissal, unfair dismissal, and that he is released from any post-termination restrictive covenants. (Cook v MSHK and Ministry of Sound Recordings, CA)
Any letter reserving rights needs careful drafting. It must not be overly aggressive, as this could give rise to a constructive dismissal claim for breach of the implied duty of trust and confidence (thereby also releasing the employee from post-employment covenants). The letter should also make clear that the outcome of any investigation has not been prejudged.