Employers need to be sure an employee is guilty of gross misconduct to avoid
paying compensation
Very often an employer will need to dispense with the services of an
employee instantly, particularly if the individual is a threat to the business.
In cases of fraud or violence, for example, many employers will decide to
dismiss summarily, without notice.
To justify a summary sacking, the behaviour of the employee must amount to
gross misconduct which the law defines as being so serious as to amount to a
fundamental breach, and thus a repudiation, of the contract by the employee.
It is crucial for the employer to be certain the employee has been guilty of
gross misconduct, otherwise dismissal without notice will be a breach of
contract, entitling the employee to compensation for lost salary and benefits
during the notice period. The dismissal is also likely to be unfair, giving the
individual the opportunity to seek compensation for losses beyond the notice
period.
Good sense
A number of recent cases have highlighted the good sense of defining in the
contract of employment what the parties mean by gross misconduct, and the
circumstances in which the employee can expect to be dismissed without notice.
This has two main benefits:
• It brings certainty: if a university is uncertain whether a teacher
entering into a physical relationship with a student would amount to gross
misconduct, it can list this as a summary dismissal offence in the contract.
• It enables employers to include conduct that would not normally constitute
gross misconduct as conduct justifying summary dismissal in the context of
their particular business requirements.
In Uzoamaka v Conflict and Change Ltd (IRLB, September 1999), the employee’s
contract stated that he could be summarily dismissed for behaviour which could
bring his employer, a charity, into disrepute.
The Court of Appeal held his summary dismissal for voluntary work, which
involved being alone with a teenage girl and which had actually caused no
damage to the reputation of the employer, was lawful as a result of the
specific contractual provision.
In Wheatley v Control Techniques (30 September 1999, unreported), Wheatley’s
contract stated his employment could be summarily terminated if he engaged in
conduct which was materially adverse to the interests of his employer.
Employer justified
The High Court held the employer was justified in dismissing him without
notice for encouraging disaffected employees to leave the company, calling for
the dismissal of fellow directors and taking steps to set up another business,
albeit non-competing.
The introduction of a materially adverse test meant this test rather than
the common law test of fundamental breach determined the right of the employer
to dismiss Wheatley on the spot rather than give him notice.
Under ordinary common law principles neither Uzoamaka’s nor Wheatley’s
behaviour is likely to have been considered as amounting to conduct
fundamentally inconsistent with their ability to continue to perform their
contractual duties. Hence, without the specific contractual provisions, each
employer would have been much more vulnerable to a finding of wrongful
dismissal.
Defining circumstances
The High Court and the Court of Appeal specifically affirmed the right of
parties to an employment contract to define the circumstances in which the
contract may be terminated summarily.
Summary dismissal clauses may of course still be open to differing
interpretations. What, for instance, is exactly covered by conduct likely to
bring the employer into disrepute?
However, at the very least such clauses put employers who do wish to dismiss
summarily in a stronger bargaining position in severance payment negotiations
than they would otherwise be.
By Alastair Brunker, a solicitor specialising in employment law with Shell International
