Criminal charges and dismissal

Employer rights when an employee is charged with an offence

Tariq Nabi is an employment lawyer at Dentons

by Tariq Nabi

Tariq Nabi is an employment lawyer at Dentons.

If an employee is in custody pending trial, can we decide the employment contract is frustrated?

Frustration means that unforeseen circumstances make it impossible for one or both parties to fulfil their obligations under a contract.

This is a very high hurdle to reach and tribunals are generally reluctant to find that a contract was frustrated unless the employee will be in custody for a long time. It is usually safer for an employer to argue that being in police custody constitutes some other substantial reason for dismissal and carry out a disciplinary process as described below.

Does an employer have an automatic right to dismiss an employee who is charged with a criminal offence outside work?

In short, no. The most common reason an employer considers dismissing an employee in these circumstances is reputational risk. In legal terms, this would fall into the category of “some other substantial reason”, which is a potentially fair reason for dismissal. However, there must be some connection between the alleged offence(s) and the potential for damage to reputation. In addition, a tribunal would expect the employer to be able to establish a credible basis for believing the alleged offence may damage its reputation.

You must also still follow a fair and transparent disciplinary procedure and be able to show that the decision to dismiss was, in all of the circumstances, a reasonable one.

What factors should we consider before reaching a decision?

Employment tribunals have established guiding principles to help employers avoid knee-jerk reactions that potentially open the door to unfair dismissal claims.

You should consider if there is a sufficiently close connection between the allegations, the nature of your organisation, and the duties and role performed by the employee.

If, say, a customer assistant is charged with theft or fraud outside work, that allegation is more likely to be considered relevant to a retail business and the employee’s daily routine duties than an offence such as breach of the peace while at a stag or hen party.

Close public scrutiny within the industry, how cooperative the employee is during the internal investigation and if other colleagues are negatively affected by the employee being kept in place are also valid considerations.

On a practical level, what should employers do?

Dismissal should usually be viewed as the option of last resort following consideration of other reasonable alternatives. Employers should investigate, critically consider and document the facts clearly, assessing any police or bail reports (if available). Establishing guilt or innocence is not the objective here – the employer is not a criminal court. Instead, you should focus on the potential reputational damage to the business.

At a disciplinary hearing, the employee must be allowed to state their version of events before you make a decision. If you conclude you cannot retain the employee in their current role, consider alternatives to dismissal, including redeployment, reduced duties, or suspension on full pay pending the outcome of the criminal proceedings.

If these options are not suitable, document the reasons why. This may be because no trial date has been fixed and open-ended suspension on full pay may be an inappropriate use of resources.

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