Conducting disciplinary procedures fairly

In misconduct cases, employers need only conduct a reasonable investigation. Perfection is not required in order to avoid a claim for unfair dismissal, either in this or in any aspect of the disciplinary process. Nonetheless, case law often throws up instructive examples of traps to avoid, as two recent Court of Appeal decisions from the health sector illustrate.

In one case, the NHS trust had decided to dismiss a nurse for gross misconduct without fully investigating a possible conflict of evidence about the core allegation against her, which involved suspected abuse of a patient. Restoring the decision of the employment tribunal that she had been unfairly dismissed, the Court of Appeal suggested that employers needed to be especially careful when the consequences of dismissal would be particularly serious for the employee. So it was legitimate in this case for the tribunal to give weight to the fact that, if she were dismissed, the nurse faced possible deportation.

In the other case, the NHS employer got into difficulties because it took a decision to escalate the disciplinary process. It had started by using an informal procedure under which the doctor involved could not have been dismissed. Halfway through the investigation, it uncovered new allegations, which led it to switch to the formal disciplinary procedure, and ultimately the doctor’s employment was terminated. In the employment tribunal’s view, no proper explanation had been offered, either at the time or at the tribunal hearing, for this change of heart. That led it to conclude that the dismissal had been unfair. The Court of Appeal backed the tribunal’s decision, saying that the unexplained escalation of the procedure supported a finding of unfair dismissal. Similar considerations would apply in the private sector if an employer decided to impose a penalty more severe than that originally envisaged without an adequate explanation.

Complying with contractual obligations

As well as keeping an eye on the general standards of fairness expected of a reasonable employer, it is also necessary to make sure that the requirements of any contractual disciplinary procedure are followed. Contractual disciplinary procedures are much more common in the public sector, but can also be found in the private sector, sometimes without the employer being aware that an agreed procedure has contractual effect.

Failure to follow such a procedure could lead to employees seeking an injunction to block dismissal pending full compliance with the procedure. Alternatively, they could bring a claim for damages for breach of contract. It used to be thought that such claims would be relatively modest, but a recent Court of Appeal decision suggests that an employer's liability for such a breach is potentially unlimited. It rejected the NHS employer’s argument that the maximum liability should be limited to what the employee would have earned during the time it would have taken to operate the disciplinary procedure in accordance with the contract. On the contrary, if the employee would not have been dismissed at all had the procedure been operated correctly, he would in theory be entitled to compensation to reflect the resulting loss for the remainder of his career.

However, it may be difficult for employees to obtain more than the pay they would have earned while the contractual disciplinary procedure ran its course, since they would have to show that their employer would not have decided to dismiss them in any event. As this particular appeal was on a preliminary issue, we still do not know how far the doctor involved will be able to progress his claim for damages.

The right to legal representation

Traditionally, it has been accepted that lawyers are not involved at disciplinary hearings, unless of course this is permitted by a contractual disciplinary procedure, the NHS procedure for disciplining doctors being a case in point. Recently the status quo has been challenged in a number of cases by invoking the Human Rights Act. Of these, potentially the most far-reaching involves a teaching assistant suspected of sexual misconduct, who argued that the governors of the school where he was working should have allowed him legal representation at his disciplinary hearing.

The Court of Appeal accepted his argument that the career ending nature of these allegations meant that to deny him legal representation would be to infringe his rights under article 6 of the Human Rights Convention. His employers will be taking the case to the Supreme Court, so we will have to wait a while before we get a final answer. Even if the employer’s appeal is dismissed, it is not clear how far this principle will run outside the public sector. The Human Rights Act does not apply directly to private sector organisations, but success in the Supreme Court for the teacher would make it that much easier to argue that similar protection should be offered across the board if the allegations that employee has to meet are career threatening.

Assessing the legality of a termination package

A frisson went through the public sector last year when a High Court judge declared that Rose Gibb’s generous but unexceptional termination payment was beyond the powers of the NHS trust to make. That decision was reversed earlier this year. The Court of Appeal was highly critical of the stance her employer had taken, admittedly prompted by political pressure from the then Secretary of State for Health.

Things are not quite back to square one because the Court of Appeal has, in the process, issued some guidance about the factors that can legitimately be taken into account when deciding the level of termination payment to offer. As well as the potential legal exposure to the employer, factors like past service and the saving of the time and effort involved in fighting the case through the courts can also be taken into account. In the current economic climate, it is likely that all employers will continue to take extra care to ensure that any termination package reflects a thorough and objective assessment of the legal risks it is used to buy off.