Wrongful dismissal, unfair dismissal and gross misconduct?

DisciplinaryAfter two years of employment an employer must have a “fair” reason to terminate an employee. A potentially fair reason for the termination of employment is an employees misconduct, but when does a disciplinary matter become gross misconduct?

Under the common law, employers and employees have the ability to terminate a contract of employment, for any reason, in accordance with the notice provisions of the contract in place, or where notice is not specified, following reasonable notice.

An unfair dismissal occurs when an employee’s statutory right not to be unfairly dismissed by their employer is breached contrary to the Employment Rights Act 1996 [ERA].  The ERA requires that in order for the reason for dismissal to be legitimate it must be related to one of a number of specified fair reasons and that the employer’s conduct in relation to the termination must have been reasonable under the circumstances. Section 108 of the ERA limits the right not to be unfairly dismissed to those employees who have continuous employment of two years with their employer at the date of termination, unless the reason for the dismissal is one where the standard qualifying period of continuity does not apply in order to maintain the protection afforded by certain other statutory provisions.

From a statutory perspective, the ERA provides that, when determining whether the dismissal of an employee for a particular reason is fair or unfair, consideration must be given to the individual merits of the situation and whether, in deciding to dismiss, the employer acted reasonably in treating the reason as a sufficient basis for the dismissal.  However, a dismissal is normally be made in accordance with the terms of the contract of employment.

A wrongful dismissal occurs where an employer breaches the express or implied terms of an employee’s contract when terminating their employment, or there is a repudiatory breach by the employer which is not accepted by the employee which results in the termination of employment.  Although there is consideration for the specific nature of the contract of employment, in general terms a wrongful dismissal is an action under common law for a breach of contract.

With this in mind, gross misconduct occurs where there is a repudiatory breach of contract on the part of the employee.  Although, a reasonable employer should  follow their disciplinary procedure in order to ascertain the merits of the situation and the termination is a result of the conduct of the employee, which a fair reason under the ERA, gross misconduct differs in that the contract has been breached.

An employer may end the employment of an employee where they have committed a repudiatory breach of the terms of the contract.  In Spain v Arnott ([1817] 171 ER 638) it was justifiable to summarily terminate a servant who deliberately failed to follow orders. Other reasons which justify summary dismissal under common law include moral misconduct, wilful disobedience, habitual neglect (Callo v Brouncker [1831] 172 ER 807) or wilful disregard to the contract of employment (Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 1 WLR 698).

The courts have indicated that employers should make it clear as to what conduct would constitute gross misconduct, which is supported by the latest ACAS code of practice (March 2015).   This indicates that theft, fraud, physical violence, gross negligence and serious insubordination may be included as reason for termination due to gross misconduct.  However, it important that organisations consider what they consider constitutes gross misconduct and communicate this to their employees.


Jim Taylor LLM

The opinion given in this article is for general information only and is intended to illustrate and highlight themes which may affect employers and their employees. It should not be taken as specific advice on any situation or the appropriate course of action for any particular company or employer. Should you wish to discuss a similar situation or any other matter please contact Ascent HR Limited. ©Ascent HR Limited.

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