Court of Appeal provides guidance on handling disciplinary proceedings where there is an ongoing criminal or regulatory investigation

The Court of Appeal has held that employers do not have to postpone disciplinary proceedings to wait for the outcome of criminal or regulatory investigations.  However, employees must receive full pay during any period of suspension unless there is an express contractual right to withhold it or exceptional circumstances (such as a complete or part admission of guilt) (North West Anglia NHS Foundation Trust v Gregg (2019) CA)

Background

Disciplinary proceedings that coincide with ongoing criminal and/or regulatory investigations

Where employees are suspected of having committed misconduct in relation to their employment which also constitutes a criminal or regulatory offence (such as theft, assault, fraud, substance abuse), employers will need to consider whether to refer the matter to the police and/or any other relevant regulatory body.  If involvement from the police or regulatory body is considered appropriate and the employee is later charged with a criminal office or subjected to further regulatory proceedings, this can have a bearing on the employer's internal investigations.

However, dismissal is an employment matter, to which the 'range of reasonable responses' test applies.  This means that employers are not obliged to be sure 'beyond reasonable doubt' that an employee has actually committed an offence before dismissing, but need only have a genuine belief on reasonable grounds after reasonable investigation that the employee committed the offence in question (BHS Ltd v Burchell 1980, ICR 3030, EAT). Therefore, whilst employers need not wait until a criminal trial or regulatory investigation has concluded before dismissing an employee, sufficient material must be obtained to justify any decision to dismiss.  This can be difficult when the fact that criminal charges have been brought may limit what the employer is able to do.  

Pay during suspension

Employers exercising their right to suspend an employee are subject to an implied term that they will exercise the power reasonably and ensure that the period of the suspension is as short as reasonably possible. 

Whether suspension amounts to a breach of trust and confidence depends upon whether there was reasonable and proper cause for the employer's action. 

As suspending an employee during a disciplinary investigation is not a disciplinary sanction in itself, employers should usually pay the employee while he or she is suspended.  Employers can only suspend employees without pay if there is a contractual right to do so, and, even then, will need to act reasonably to avoid a breach of contract entitling the employee to claim constructive dismissal.

Facts

The Claimant was employed as a consultant anaesthetist by North West Anglia NHS Foundation Trust (the Trust).  In 2016, the Trust became concerned about the death of a patient under the Claimant's care and launched an investigation into the circumstances whilst also excluding him from duty on full pay. At the same time, the police and the General Medical Council (GMC) became involved.  

In January 2017, a second investigation was launched into another patient's death.  

In May 2017, the Interim Orders Tribunal of the Medical Practitioners Tribunal Service imposed an interim suspension order on the Claimant, resulting in his registration being suspended and licence withdrawn for 18 months.  In light of this, the Trust lifted the Claimant’s exclusion, but suspended his pay.

The Trust sought to hold a separate hearing to dismiss the Claimant on the basis that he had no registration to work (i.e. for a separate reason to his alleged conduct), but, in November 2017, the Claimant issued a claim for an injunction to prevent the Trust from continuing with the disciplinary proceedings and from not paying him during his interim suspension. The Trust counterclaimed that it was entitled to hold the hearing to dismiss the Claimant on the basis that he had no registration to work.

High Court 

The Claimant successfully obtained an injunction from the High Court preventing the Trust from continuing its investigation until after the police had completed their investigation and a decision had been taken by the Crown Prosecution Service as to whether or not to charge him.  The High Court also found that the Trust was in breach of contract for not paying the Claimant’s salary during the interim suspension period. 

The Trust appealed to the Court of Appeal.

Court of Appeal

The Court of Appeal (Court) overturned the High Court injunction, holding that employers do not have to postpone disciplinary proceedings to wait for the outcome of criminal or regulatory investigations.  However, the Court upheld the High Court's findings that the Claimant should have been paid full pay during his suspension. 

In respect of whether the Trust's actions had breached the contract, the Court made the following findings.

1. Withholding the Claimant's pay during the interim suspension amounted to a breach of contract

The Court found that the Trust had not been entitled to withhold the Claimant's pay during the period of his interim suspension because:

• The interim suspension was for the purpose of preserving the position until more was known about the allegations, rather than a suspension imposed by way of a sanction;
• The express terms of the Claimant's contract did not permit the deduction of pay during an interim suspension, nor was there any evidence that this had become an implied term of the contract by custom and practice;
• The Claimant had remained 'ready, willing and able' to work, despite the fact that he was subject to the decision of a third-party tribunal to remove his registration / licence to work (which had been made against his will).  Importantly, the Court warned that employers should exercise caution before concluding that an employee could be characterised as avoidably or voluntarily unable to work in such circumstances because to do so would stray uncomfortably close to an assumption of guilt.

The Court concluded that where a contract is silent on the issue of pay deduction during a period of suspension, the default position should be that an interim suspension should not attract the deduction of pay. Only exceptional circumstances, such as a complete or part admission of guilt, might justify such a deduction, which would not be expected to be an ordinary occurrence.

2. Inviting the Claimant to a hearing to discuss the possibility of terminating his contract because of his failure to maintain his licence did not amount to a breach of contract

On this issue, the Court held that the High Court was wrong to find that the Trust would be acting unfairly in inviting the Claimant to such a hearing.  The Court considered that the Trust was not obliged to hold such a hearing at all and may even have been entitled to terminate his contract straightaway. There was no basis for saying that the holding of a hearing in advance of the taking of such a decision was, or could be, unfair.

3. Pursuing an internal disciplinary process in parallel with an investigation by the police did not amount to a breach of contract

The Court outlined that:

• an employer does not usually need to wait for the conclusion of any criminal proceedings before dismissing an employee or commencing or continuing internal disciplinary proceedings; and 
• courts will usually only intervene if the employee can show that the continuation of the disciplinary proceedings will give rise to a real danger (not just a theoretical danger)  that there would be a miscarriage of justice in the criminal proceedings if the court did not intervene.

Here, the Court found that the Trust's actions in progressing the disciplinary process without waiting for the outcome of the separate police investigation were not calculated to seriously damage the employment relationship, and that, in any event, there was a reasonable and proper cause (as it was simply a contractual process).  Therefore, there was no breach of the implied term of trust and confidence.  There was also no evidence that the internal disciplinary process would even have any effect on the criminal investigation or give rise to a real danger of a miscarriage of justice.

The Court considered that there was no justification for interfering with how the Trust managed their own employees and overturned the injunction.  In their view, the High Court's decision to grant the Claimant's injunction to postpone the disciplinary process to await the outcome of the police investigation amounted to micro-management. 

Comment

The case provides useful clarification on some of the trickier issues that commonly arise in the context of disciplinary proceedings where there is a parallel criminal or regulatory investigation.  The case provides useful confirmation that:

1. Where employees are suspended they should remain on full pay, unless the contract of employment expressly provides for a deduction of pay in such circumstances or exceptional circumstances arise (such as an admission of guilt).  

This remains the case even where a relevant licence has been temporarily suspended by an external body, resulting in the employee being unable to practice until their licence is reinstated.  This principle will be relevant to employers in other sectors where a licence or registration may be required from an external body.  Although the employee will not be permitted to carry out their role until restrictions on their licence or registration have been lifted, unless there is an express contractual right to suspend without pay (or with reduced pay) in such circumstances or any relevant exceptional circumstances, the employee should, nevertheless, receive full pay for the period of suspension. 

2. Employers are entitled to progress their own internal disciplinary proceedings and/or dismiss an employee without waiting for the conclusion of any criminal proceedings.  

Ultimately, whether an employer puts their own internal investigation on hold while the police or regulatory investigation is underway will be a matter to be decided on a case-by-case basis, based on the relevant facts and whether sufficient material can be obtained to take an informed decision.

North West Anglia NHS Foundation Trust v Gregg