Dismissal and reasonableness of investigations

An Employment Tribunal’s examination of the fairness of a dismissal focuses largely on the extent to which the employer can show that it followed a fair procedure and acted reasonably in all the circumstances.

Case law over time has developed a  test which requires the employer to show that they had an honest belief in the employee’s guilt which is based on reasonable grounds having carried out as much investigation as is reasonable in the circumstances of the case.  This means that an employer must have conducted an appropriate level of investigation and this is an objective test which the Tribunal must be satisfied has been passed in order for a dismissal to be potentially fair.

In a recent case before the Employment Appeals Tribunal, this very test was applied to circumstances where an employee was alleged to have claimed excessive expenses for mileage travelled to see clients in their homes.

The employer in this case undertook an audit over a 3 month period, comparing the mileage claimed by the employee against the distances that he had travelled.  It was shown that the mileage claimed was nearly twice as far as the distance travelled.  An allegation was brought against the employee that he had committed an act of fraud in over claiming mileage expenses.

As part of the investigation, the employer relied on the AA website to show the correct distances travelled and a comparison was made with the previous year’s expenses claims which were much lower, but for the same journeys.   At the disciplinary hearing ,the employee sought to advance several reasons for the discrepancies such as difficulties in parking, having to take longer routes because of road works and an increase in one-way system roads.

Importantly the disciplinary hearing did not focus on each and every journey for which excessive expenses had been claimed.  Once it had been established that every journey was above the expected mileage, the employer was satisfied that a feasible explanation could not be given for every single journey and therefore focused purely on two journeys by way of example.

The case eventually reached the Court of Appeal, who ruled that it would be far too onerous to expect the employer to review every single journey to determine guilt.  It also rejected the employee’s arguments that the employer should have carried out further investigations such as contacting the Local Authority to see whether parking bays had been changed to residents only and that they should have gone to check the position of all parking spaces themselves.  It was also rejected that the employer should have been expected to contact the Local Authority to find out where all of the road works and diversions had been set up over the 3 month audit period.

The case is a useful reminder of the application of the test in unfair dismissal and the level of investigation to be carried out.   An employer must carry out a ‘reasonable’ investigation, but this does not mean having to exhaust every line of investigation and it does not have to prove guilt beyond reasonable doubt.  In this case it may have been prudent to require the employee to make such enquiries of the Local Authority as he saw fit in order to be able to present a credible defence.