See our latest employment law briefing which explains the statutory steps to fair dismissal.

Misconduct on the part of an employee is one of the potentially fair reasons for dismissal set out in the Employment Rights Act. However, misconduct which does not amount to gross misconduct will not justify dismissal unless the employee is already on a final warning.

So what is gross misconduct? There is no definition given in employment legislation – it is usually described as conduct by the employee which destroys the employment relationship.

In other words it is so serious that the employee cannot remain in your employment. There are some obvious acts which will probably amount in most circumstances to gross misconduct, where a single act will justify dismissal (following, of course, a thorough investigation and a properly conducted disciplinary hearing) such as theft, assault on another employee, wilful damage to company property and serious breaches of health and safety rules which place others in danger.

However the situation is less clear in many of the cases where the employer believes they have no alternative but to dismiss.

Where an employee has been incompetent in the performance of his or her duties this will almost certainly not amount to gross misconduct, even if this conduct has resulted in damage to the business.

The maximum sanction which the employer will be able to apply in such cases will be in a final written warning. There may be a very occasional exception where dismissal might be justified, but in practice this will be rare. Incompetency would normally be dealt with under capability procedures.

Most employers list, in their disciplinary procedure, those acts which will be regarded as gross misconduct. As long as an act is sufficiently serious, Tribunals will not generally challenge the employer’s view and decide that a particular act does not in fact fall into this category.

Employers will not, however, be able to dismiss for more trivial acts of misconduct simply because the employer has labelled them as ‘gross misconduct’.

Also, it will probably be unfair to dismiss for offences which are described as gross misconduct but are vaguely worded for example, ‘bringing the company into disrepute’. This could mean almost anything, and advice would be essential to establish the strength of your case against the employee.

It is vitally important, when disciplinary action is to be taken, that the employee concerned is told (in writing) that the alleged conduct is regarded by the employer as amounting to gross misconduct and that the outcome of the disciplinary procedure may be summary dismissal. (Summary dismissal simply means dismissal without any notice or pay in lieu of notice.

Employees held to be guilty of gross misconduct should never be dismissed with notice, or pay in lieu, as this implies that they have not destroyed the employment relationship and that their conduct cannot therefore be argued to amount to gross misconduct.) Advice should always be sought before any discussions with, or letters to, an employee suspected of gross misconduct are actioned.

Tribunals also regard it as essential that employees have been made aware of what misconduct is likely to result in summary dismissal. There are some acts which would be universally regarded as gross misconduct, such as stealing from the employer, but in other cases a dismissal is likely to be unfair if the employee can show that he or she did not know their behaviour was so regarded. It is therefore important to be able to prove that employees have been made aware of your disciplinary procedures.

This may take the form, for example, of confirmation by each employee that they have been given, or have had an opportunity to read, the company handbook which sets out these procedures.

Investigation is essential. It is, after all, the employee’s livelihood which is at risk, and Tribunals will expect there to have been as thorough an investigation into the facts of the allegation (including the gathering of witness statements where appropriate) as the organisation’s resource will allow.

This investigation should include a meeting with the employee concerned to give the employee an opportunity to respond before deciding whether to proceed to a disciplinary hearing, but it is important that this meeting is conducted as a fact-finding exercise and does not turn into a disciplinary hearing.

Since, as noted above, gross misconduct destroys the employment relationship the employee cannot be allowed to continue working while this investigation is under way. They should therefore be immediately suspended on normal pay until the investigation is complete and a disciplinary hearing is held (or, in exceptional cases, the employer decides there are no grounds for further action).

In some cases, however, it may not be appropriate to suspend an employee immediately an act of potential gross misconduct comes to light. The point at which to suspend is when the employer has reasonable grounds for suspecting that the individual may be guilty of the offence, and in some cases it may be necessary, once an incident has occurred, for some investigation to identify those likely to be responsible.

Again, given the potential consequences for the employee concerned, a thorough disciplinary hearing must be held. This should be chaired (if possible) by someone who has not been involved in the investigation.

The employee must be provided, in advance of the hearing, with copies of all documents to be used as evidence for example witness statements, expense claims, time sheets, invoices etc. An opportunity should be given before the hearing for the employee to view any CCTV evidence. No decision should be made on the day of the hearing.

It cannot be emphasised too strongly that gross misconduct dismissals should be very exceptional events. The great majority of misconduct by employees, while it is of course unacceptable to the employer and may be detrimental to the business, should be addressed by warnings. The employer is free to impose a warning that is commensurate with the gravity of the misconduct, so that a final warning can, if appropriate, be issued for a first offence.

All dismissals for reasons of conduct must now follow the basic requirements set out in the statutory Dispute Resolution Procedures that came into effect from 1st October 2004 (3rd April 2005 in Northern Ireland).

Failure on the part of the employer to comply with these procedures can result in an otherwise fair dismissal being ruled automatically unfair, and an increase of up to 50% in compensation awarded. Following these requirements does not, however, ensure that a dismissal will be found fair on substantive grounds, and it is essential that the additional procedures summarised above are also adhered to.

Gross misconduct dismissals are therefore potentially high risk both substantively and procedurally, and it is essential that companies seek advice immediately an issue arises so that they can be assured that they are handled in the correct manner.

Mike Huss is a senior employment law specialist at Peninsula law firm