Wrongful Dismissal: when does employee conduct justify no notice?
Most HR professionals are well acquainted with unfair dismissal. It dominates disciplinary discussions and tribunal headlines. Wrongful dismissal, however, often sits quietly in the background. Unlike unfair dismissal, it is not concerned with whether an employer acted reasonably. It is a contractual claim focused on whether an employee was entitled to notice pay when their employment ended.
The contractual framework
From a contractual perspective, employment can usually be terminated lawfully by giving the required notice. The relevant notice period will normally be set out in the contract. Where proper notice is given, or a valid payment in lieu is made, there can be no claim for wrongful dismissal.
The exception is where the employee has committed a repudiatory breach of contract, entitling the employer to terminate without notice. Whether misconduct amounts to a repudiatory breach depends on whether it “so undermine[s] the trust and confidence which is inherent in the particular contract of employment that the employer should no longer be required to retain the employee in employment” (Neary v Dean of Westminster). It is a high threshold.
When is conduct repudiatory?
Whether an employee has committed a repudiatory breach is an objective legal question. Would a reasonable person conclude that the conduct fundamentally destroyed the employment relationship?
At the extremes, the answer is usually straightforward. Deliberate dishonesty, serious violence and gross negligence are familiar examples. More difficult are the cases that fall between those extremes, where context and surrounding circumstances become important.
In XX v YY, an assistant headteacher sent a sexual message to someone she believed to be under 18. Many employers would instinctively regard this as gross misconduct justifying summary dismissal. However, there was an important complication. She acted while trapped in a coercive and controlling relationship and under threats of serious harm to herself and her children if she failed to comply.
The tribunal initially held that these circumstances were irrelevant to wrongful dismissal. The EAT disagreed. The issue was not whether her motives excused the conduct, but whether all the surrounding circumstances affected the assessment of whether trust and confidence had been destroyed. Context, therefore, can be highly relevant.
That does not mean difficult personal circumstances will prevent conduct amounting to gross misconduct. The EAT noted that the employee’s failure to report her actions once the source of duress had ended might ultimately amount to a repudiatory breach. The important point is that conduct should not be assessed in isolation.
Evidence discovered after dismissal
Another unusual feature of wrongful dismissal is that employers may be able to rely on repudiatory conduct discovered after the dismissal to justify summary termination (Boston Deep Sea Fishing v Ansell).
In Omooba v Michael Garrett Associates, an actor accepted a role in The Color Purple despite knowing she would refuse to play a lesbian character because of her religious beliefs. The theatre only discovered this after terminating her contract. Nevertheless, the EAT held that she had been in repudiatory breach throughout the contract, allowing the employer to accept that breach and justify dismissal without notice even though it was unaware of the conduct at the time.
Historic breaches
Similarly, in Williams v Leeds United, the High Court confirmed that an employer may rely on a repudiatory breach committed many years earlier, provided it acts promptly once the breach is discovered. The employer successfully relied on an email containing pornographic images that had been sent more than five years earlier. The court was not troubled by the fact that forensic IT consultants had been instructed specifically to search for evidence that might avoid liability for 12 months’ notice pay.
Gross misconduct clauses are not conclusive
Many employers include contractual or disciplinary lists of conduct described as ‘gross misconduct’. These lists are useful, but they are not determinative.
Simply labelling conduct as gross misconduct does not automatically entitle an employer to dismiss for such conduct without notice. The conduct must still amount to a repudiatory breach of contract.
In Robert Bates Wrekin Landscapes v Knight, the EAT held that an employer could not rely on a contractual gross misconduct provision to dismiss an employee without notice for a minor and inadvertent breach of a customer’s security requirements. The necessary element of deliberate or sufficiently serious wrongdoing was absent.
That does not make gross misconduct lists redundant. They remain a relevant factor when assessing the seriousness of conduct, but they cannot replace the legal test.
Key takeaway
The practical lesson for HR is simple. When faced with apparent gross misconduct, ask not only what happened, but also whether all the circumstances affect the objective assessment of whether the employment relationship has been fundamentally undermined. Sometimes they won’t. Occasionally, as XX v YY reminds us, they just might.