Adesokan v Sainsbury’s Supermarkets Limited [2017] EWCA Civ 22

Why care?

There were two important points to be considered in this case: what constitutes gross misconduct, and what the appropriate damages for wrongful dismissal should be.

An employer is entitled to summarily dismiss for gross misconduct. Whether something is gross misconduct is a question of fact. Gross misconduct should not be limited to cases of dishonesty or intentional wrongdoing (Neary v Dean of Westminster (1999)) and a court may also consider whether conduct was of “ such a grave and weighty character as to amount to a breach of the confidential relationship between master and servant” and, if so, give the employer the right to dismiss without notice: Sinclair v Neighbour (1967).

Turning to the damages question, In Gunton v Richmond-upon-Thames (1980), the Court of Appeal held that where an employee accepted the termination of their employment at trial if not before, a wrongfully dismissed claimant could only claim for notice pay and, where relevant, the time a proper contractual disciplinary process would have taken. The employee was not entitled to ongoing wages as he had ceased to discharge the obligation of work in return for the benefit of wages. In Geys v Societe Generale (2013), the Supreme Court held that a repudiatory breach (the summary dismissal of an employee pursuant to a PILON clause, but without operating the PILON precisely in accordance with the contract) does not automatically terminate the employment contract, rather the contract is not brought to an end until and unless the innocent party elects to accept the breach. Geys was authority to allow employees to refuse to accept their wrongful dismissal and to claim for continuing wages as a debt, rather than damages.

The case

The Claimant was employed by Sainsbury’s for about 26 years, latterly as a Regional Operations Manager, until he was dismissed for gross misconduct.

Sainsbury’s have monitored staff engagement for many years through the Talkback Procedure (TP). TP is a deeply engrained in Sainsbury’s culture and the results also influence performance progression, target setting and decisions about pay and staff deployment. Given its importance within the company, great emphasis is placed on the integrity and validity of the process.

In June 2013 an HR manager, Mr Briner, sent an email to store managers which could have had the effect of tainting TP results. Although the email was ostensibly sent by the Claimant and Mr Briner jointly on 17 June, in fact the Claimant knew nothing about it until 24 June, when TP still had 10 days to run. He asked Mr Briner to clarify what he meant with the store managers, but Mr Briner did not do so. In fact, the email was recirculated twice more on a chain of emails. On 1 July, the Claimant learned that Mr Briner had not followed his order but he did nothing to remedy the problem himself (including contacting the store managers, or alerting senior management).

On 13 September, a copy of the email was sent anonymously to Sainsbury’s CEO. After an investigation (which accepted that the Claimant was not complicit in the sending of the email), the Claimant was summarily dismissed on 25 October for failing to take adequate steps to rectify the situation: “gross negligence on [his] part which is tantamount to Gross Misconduct”.

The Claimant’s contract defined gross misconduct as “a breach of our standards or rules that is so serious that it can lead to summary dismissal when you are dismissed immediately without notice”, followed by a series of examples, mainly of intentional or deliberate misconduct but some examples (such as a breach of health and safety rules) could be committed in a negligent or deliberate way. The final entry on the list was “any other serious breach of procedure or policy that leads to a loss of trust and confidence.”

The Claimant issued a claim in the High Court for wrongful dismissal, seeking compensation of up to £139,000 for lost salary, lapsed shares, and unpaid benefits.

The High Court (Gore J) found that the Claimant was not dishonest and had not made a conscious decision not to take steps to eliminate the effects of the email. However, his failure to take active steps to remedy the situation was gross misconduct and, despite being inactions rather than action was sufficient to undermine the trust and confidence in the employment relationship so as to justify summary dismissal.

The Claimant appealed to the Court of Appeal, submitting that his conduct could not be gross misconduct: given his long, unblemished service and that he did not send the email, it was too harsh to summarily dismiss him for a single act of negligent (not gross negligent) wrongdoing. In practice no harm was caused to Sainsbury’s. In the alternative, he argued that he could not be dismissed for this kind of gross misconduct because the examples of gross misconduct do not envisage negligent acts, or only against third parties, and because the Claimant’s acts were not a “serious breach of policy or procedure”.

The Court of Appeal started by asking what is gross misconduct and referred to Neary v Dean of Westminster (1999) and Sinclair v Neighbour (1967). A negligent omission was sufficient to be considered gross misconduct. Whether it is in any case is a question of fact. The definition is not limited to deliberate wrongdoing or dishonesty, and the court or tribunal should focus on the damage to the relationship between the parties. If dishonest or other deliberate actions can damage the relationship and warrant summary dismissal, the same applies to negligence.

The High Court had found that as Regional Manager, the Claimant was obliged to ensure that this survey was conducted properly. He chose not to take steps to rectify the email, a matter which clearly interfered with the integrity of the survey. The Court of Appeal saw no reason to interfere in what was a reasonable decision on the facts.

The Court of Appeal rejected the arguments that the contract itself precluded a finding of gross misconduct, since the examples given did include acts of negligence, and in any case they were only examples. There was no rational basis to argue that the negligence must affect third parties to be gross misconduct.

Having found that Sainsburys was entitled to dismiss for gross misconduct, there was no need for the Court of Appeal to go on to what damages a claimant might be entitled for wrongful dismissal. However, Elias LJ said that Gunton was unaffected by Geys and referred to paragraph 78 of Gunton, in which Wilson LJ said “the law has been clear… that, save when, unusually, a contract of employment specifies otherwise, the mere readiness of an employee to resume work, following a wrongful dismissal which he has declined to accept, does not entitle him to sue for his salary or wages.” Elias LJ said that Gunton therefore remains binding on the Court of Appeal, and if the law is to be changed, it is for the Supreme Court to do so if it considers it appropriate.

What to take away

Firstly, negligence can be enough for gross misconduct – depending on the circumstances of the case. A court or tribunal should consider the damage to the employment relationship. Employers should review their contracts and staff handbooks to include “any serious act or omission that leads to a loss of trust and confidence” or similar wording as an example of gross misconduct for which the employer is entitled to dismiss without notice.

Secondly, what losses can be claimed for a wrongful dismissal? Employment contracts, like all other forms of contract, require any wrongful repudiation of the contract to be accepted. However (unlike other contracts), when they are wrongfully terminated, the employee can claim only for the notice pay that he or she would have received had the contract been lawfully terminated, suggests the Court of Appeal.