Gross misconduct or grossly unfair? How retailers can avoid a common costly mistake
Dealing with allegations of gross misconduct is tricky for any employer. If you’re an employer in the retail sector it’s something you’ll likely encounter at least once.
The temptation for employers, when faced with such a situation, is to react instinctively, dismissing an employee without going through any sort of formal process. But even where the evidence is a slam-dunk, acting in this way can expose you and your business to legal risks.
So how can you protect yourself yet still deal with any allegations quickly, effectively and robustly?
Imagine this scenario…
One of your employees is a Sales Assistant in your retail store.
He’s been with your company for 12 years and has an exemplary record.
One morning, another employee tells you that they’ve seen him taking an item from the shop floor and putting this into his personal bag.
What do you do?
Most employers would summarily dismiss the Sales Assistant for gross misconduct. This means dismissing them with immediate effect, without notice. After all, this is theft (isn’t it?); an action that the company will, under no circumstances, tolerate.
But how would you do this? Would you carry out an investigation first? Would you meet with the employee, or simply rely on the evidence of the reporting employee?
A recent case has highlighted some of the pitfalls with dealing with these issues in the retail sector context.
Stokes v Poundland Ltd
An employment tribunal claim brought against Poundland last year ruled that a Store Manager was unfairly and wrongfully dismissed when she was fired for allegedly stealing a drink.
Miss Stokes commenced employment with Poundland on 13 July 2009; she started off as an Assistant Manager and within a year was promoted to the role of Store Manager. Miss Stokes was described as having an unblemished record and was successful in her role.
In June 2017, an area sales manager and an acting store manager entered Miss Stokes’ office unannounced to investigate an allegation of theft. The allegation was that Miss Stokes had taken drinks from the damaged stock area. The company policy required all goods purchased to be counter signed by another member of staff and paid for by the end of the shift. Although Miss Stokes was told there was CCTV footage of her taking and consuming the drinks, all she was shown at her disciplinary hearing was a few seconds of her walking past with a drink in her hand. Despite requests for full footage of the CCTV of her taking and consuming the drink this was never produced.
The judge found that the company had no reasonable basis for its belief of her alleged misconduct (the accusations were likely “malicious and vexatious” given that they were made by an underperforming manager who had a performance management meeting with Miss Stokes two hours previously) and did not follow a proper investigation (an area sales manager was to report after further investigations, however none were carried out; no statements were taken from witnesses and no report was produced).
If an employee commits an act of gross misconduct this will justify summary dismissal.
However, ACAS guidance provides that even in these cases, as with any other disciplinary offence, it is important for an employer to follow a fair procedure.
This is especially important in cases where an employee has more than two years’ service. Failing to establish the facts, not holding a meeting with the employee before taking action, and/or denying the employee the right to appeal, could result in claims against an employer for unfair dismissal where employees have more than two years’ service. In some cases, failing to follow a reasonable procedure could give rise to other claims too; it could even give rise to inferences of discrimination.
So how should retailers proceed when faced with the above situation?
- Informal procedures: For some disciplinary offences, you might be able to deal with the matter informally. If you can, this can be a good way of resolving a problem quickly. However, this will not be appropriate for very serious disciplinary allegations.
- Disciplinary policy: If you would like to take a more formal route, ensure you follow the correct procedure as set out in your disciplinary policy. Your disciplinary policy needs to be kept up to date and be easily available for all staff to access.
- Act promptly: Aim to raise and deal with issues promptly. You should not unreasonably delay meetings, decisions or confirmation of those decisions.
- Investigate: Carry out any necessary investigations to establish the facts of the case.
- Suspension: It may not be appropriate for the employee to be at work while facts are established, so a short period of suspension on full pay may be helpful. It should, however, be made clear to the employee that suspension is not a disciplinary action and does not involve any prejudgment. Recent cases have stressed the importance of considering whether suspension is reasonable in all the circumstances and not just a knee-jerk reaction to a disciplinary allegation.
- Inform the employee of the problem: If you decide that there is a disciplinary case to answer, the employee should be notified of this in writing. This notification should contain sufficient information about the alleged misconduct and its possible consequences to enable the employee to prepare to answer the case at a disciplinary hearing.
- Disciplinary hearing: The hearing should be held without unreasonable delay, although you need to allow enough time for the employee to prepare their case. The employee has a statutory right to be accompanied by a companion where the disciplinary meeting could result in a formal warning being issued, the taking of some other disciplinary action or the confirmation of a warning or some other disciplinary action (appeal hearings).
- Deciding on appropriate action: After the meeting, decide whether or not disciplinary or any other action is justified and inform the employee accordingly in writing. Acts constituting gross misconduct may justify dismissal without notice, even for a first offence. However, you should always consider whether this is the appropriate sanction or whether other disciplinary sanctions might be appropriate such as a final written warning or demotion.
- Appeal: Employers should allow an employee to appeal against any formal decision made.
- Impartiality: a fair disciplinary process generally requires different people to carry out the investigation, disciplinary and appeal hearing.
- Short service employees: you may not want to go through a full formal disciplinary procedure where an employee does not have the requisite 2 years’ service to bring a standard unfair dismissal claim. However, it is important to think about following some sort of procedure (even if it is a truncated version of your normal disciplinary process) to balance any other legal risks that may arise and in order to treat the employee fairly. We would recommend taking specific advice on these situations to ensure you have not exposed yourself to unnecessary legal risks.
Finally, it’s worth remembering that you or your company engaged the said individual as your employee. Whilst it’s important legally to follow the correct procedure from a risk perspective, how you deal with your employees will also impact on your reputation (both internally, in terms of how other employees perceive you and your business, and externally, as the fact that we are writing about the “Poundland” case demonstrates).
But what does all this mean in practice?
Well, the outcome of the Poundland case should sound alarm bells for employers and remind them about the real business implications of getting this wrong.
After considering all the evidence, the tribunal found that Ms Stokes had been unfairly dismissed. She had also been dismissed in breach of contract and so was entitled to her notice pay.
When they looked at the procedure which the employer had followed, they found that it had failed to follow the requirements of the ACAS code and therefore applied a 15% uplift to her compensation. On the flip side however, they reduced her compensation by 10% based on contributory fault because she hadn’t been able to explain the circumstances as to why she’d taken the drink.
After considering all these factors, they awarded her £20,930.48 in compensation, and ordered her employer to pay a contribution towards her costs of £2,000.00.
This contains a general overview of information only. It does not constitute, and should not be relied upon, as legal advice. You should consult a suitably qualified lawyer on any specific legal problem or matter.