Esther Smith, partner at Thomas Eggar, and Martin Brewer, partner and employment law specialist at Mills & Reeve, discuss whether an employee, who has also been working for another company, should be dismissed immediately and whether the situation should be classed as gross misconduct or not.
The question:
We have an employee at the moment who we are considering for gross misconduct. She has been with us for six years. Her employment contract says she must tell the company of any work outside of her employment that she is involved in.
We recently discovered she has a role as a consultant / advisor for another company, which she does in her spare time, and which she hadn’t informed us of.
Our staff handbook lists gross misconduct examples (it does say it isn’t an exhaustive list) and includes:-
1) Dishonesty or fraud of any sort
2) Performing, arranging or carrying out any work or activity which adversely affects the company’s interests in any way.
My question is: Is what she has done classed as gross misconduct, and warrant an instant dismissal with no notice pay due, or is it not just plain misconduct and warrant a warning and reinstatement?
She argues her case that what she has done is simply not disclose something, and admits that whilst that does breach the contract, she has not really harmed the company in any way. I feel she will take us to tribunal if we dismiss and want to know what the views are out there of what we should do. Apart from this, she has been a good performer for us during her six years with the company.
Legal advice:
Esther Smith, partner, Thomas Eggar
As with any dismissal you need to consider whether a dismissal falls within the band of reasonable responses open to an employer in this situation. This does not mean, would the tribunal assessing the case come to the same decision as you did, but was the decision that you made one that a reasonable employer could have come to? Also, if you are looking at a potential gross misconduct, the misconduct in question needs to be something pretty fundamental, that goes straight to the route of the relationship between employer and employee.
With this in mind, given that this employee is a good performer, presumably has no other disciplinary issues arising during her six year’s employment, and the other work she has been doing is not in conflict with her work for you, I think that a dismissal for gross misconduct in this situation would be very harsh and I think she would get a great deal of sympathy from a tribunal were she to challenge the dismissal. Therefore my view would be that the appropriate sanction would be something short of dismissal, such as a written or possibly even a final written warning.
If there was some suggestion that she has deliberately concealed this other work as it is in conflict with the interests of your company, or that there is some risk of confidential information passing between her two employers, then you may be in a stronger position to consider dismissal. However, there does not appear to be any competitive element at all and, as she says herself, the company has not been damaged by actions.
You do not suggest that the employee disputes knowing that she was obliged to tell her employer about her other work, but on a practical point I think that it may be a good opportunity to issue an announcement to all staff to remind them of this provision in their contract and ask people to make sure they inform the company of other activities.
Esther Smith is a partner in Thomas Eggar’s Employment Law Unit. For further information please visit Thomas Eggar
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Martin Brewer, partner and employment law specialist, Mills & Reeve
For an ‘offence’ to be gross misconduct it must be something which is so heinous as to make the employee’s continued employment untenable. Some things are clearly gross misconduct – theft from the company, gross abuse of colleagues, fraudulent expenses claims and so on. Some things are less clear. Take your second example above. The ‘company’s interests’ is a very wide concept. If the employee does something which has an adverse but wholly trivial adverse impact on the company that may not amount to gross misconduct. Added to that, in every case you must take account of the employee’s explanation.
In your case the employee has contractually committed to advising you of any work she is doing outside of her employment. She does not seem to have done that and that failure is a breach of contract. The fact that it is a breach of contract does not of itself necessarily enable you to dismiss because not every breach is significant. Here you must ask whether this breach means that you have lost trust and confidence in the employee (commonly the shorthand ‘breach of trust and confidence’ is used).
Trust and confidence is a term implied into employment contracts and is fundamental to the smooth working of the employment relationship. If the employee’s behaviour was calculated or likely to destroy or seriously damage trust and confidence then this will enable you to dismiss summarily.
The key point to remember is that your disciplinary procedure doesn’t need to refer to this to enable you to dismiss (nor incidentally does it follow that just because your procedure identifies something as gross misconduct that makes it so).
But, you will only be able to answer this if you investigate and, in particular, see if you can establish why the employee says she breached her contract and whether of course you believe her explanation. You will also need to take into account her good record and length of service before determining whether dismissal is appropriate.
Martin Brewer is a partner at Mills & Reeve. Martin can be contacted at: martin.brewer@mills-reeve.com
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