Suspension was not warranted and breached implied term of trust and confidence

Upton-Hansen Architects Ltd v Gyftaki

Suspending an employee accused of gross misconduct breached the implied term of trust and confidence leading to an unfair constructive dismissal and if an employer wants to argue that the employee has been dismissed for a fair reason, they must specifically set this out in their defence.

Background

In September 2017, Ms Gyftaki, a senior architect who’d worked for her employer for four years, needed to travel to Greece for urgent family reasons. However, she’d run out of annual leave. She asked her line manager for additional leave and believed that she had been granted it, until her manager emailed her at 8.30pm the night before she was due to travel and refused the leave request. Ms Gyftaki immediately replied stating that she had to travel and could not postpone and proposed to take the leave as unpaid leave. When she returned to work four days later, she was suspended on full pay pending an investigation into her misconduct – failure to comply with a management instruction – and a further allegation relating to a period of absence the previous July (taking more leave than she’d actually booked but which was retrospectively approved by her employer).

An external investigator was appointed and met with the Ms Gyftaki and she raised a grievance. Both the grievance and disciplinary hearings were to take place on 25 October 2017. Ms Gyftaki had become unwell as a result of the suspension and investigation and had been signed off sick. She resigned on 23 October 2017, two days before the grievance and disciplinary hearings. She lodged claims for constructive unfair dismissal and wrongful dismissal, alleging breach of the implied term of mutual trust and confidence.

A tribunal held that the suspension was not warranted for the reasons given by her employer, namely, to protect the integrity of any investigation and/or its business. It also held that the inclusion of allegations relating to Ms Gyftaki having taken leave in excess of her entitlement back in July 2017 had been dealt with at that time and therefore it was quite wrong of the employer to raise those matters as potential issues of serious misconduct two months later. For these reasons, the employer had conducted itself in a manner that was objectively likely to seriously damage or destroy the implied term of trust and confidence, i.e. there had been a fundamental breach of contract. The employer appealed on technical legal issues.

EAT decision

The appeal was for the most part dismissed.

Among the employer’s arguments on appeal was that the tribunal had wrongly decided that there was no potentially fair reason for Ms Gyftaki’s dismissal. Rejecting this, the EAT held that the tribunal was entitled to find that there was no fair reason for dismissal, because the employer had not pleaded any such reason. In its response (ET3) to Ms Gyftaki’s claim, the employer denied constructive dismissal but only stated ‘save as expressly admitted, all the claimant’s claims are denied in their entirety’. Such a generic denial is not sufficient in cases of constructive unfair dismissal as it does not serve positively to identify what, if anything, the employer’s case will be in the event that constructive dismissal is found. The employer had not asserted that if the dismissal was found to have occurred, such dismissal was fair, nor what the potentially fair reason for dismissal would in that case be.

Link to judgment: https://www.bailii.org/uk/cases/UKEAT/2019/0278_18_0905.html

Comment

There are two lessons to take from this decision:

  1. Although the courts have said that referring to suspension as a ‘neutral’ act is unhelpful language and the true test is whether it is reasonable and necessary, suspension should always be used with caution. Employers should consider whether they have reasonable and proper cause to suspend – see Agoreyo v London Borough of Lambeth. Consider whether there are other factors, apart from the seriousness of the disciplinary allegations, that would justify a suspension.
  2. Employers must plead the reason for dismissal in a constructive unfair dismissal claim if they are suggesting that it’s nonetheless a fair dismissal. Here the employer should instead have pleaded that if a constructive dismissal was made out, the dismissal was nevertheless fair for an alternative reason, e.g. conduct. Employers cannot introduce this argument later.