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Gross misconduct allegation

If you are facing an allegation of gross misconduct we have the skills to help you. Employers prefer a forced resignation since it is usually the cheapest exit. We provide quick, practical and tactical advice.

We work with employees and directors from a range of industries. All of our clients are worried about their position and we work hard to protect them from unfair treatment. We have specialist knowledge of not only employment law but also the fiduciary position of directors and the company law expertise needed where share rights are impacted.

Is it a fair dismissal for gross misconduct?

Employers often find gross misconduct dismissals expedient. However, that does not make it a fair dismissal and you may have a defence. Based on experience we list some of the background reasons which are unfair:

Notice pay

Notice pay is not due when there is a summary dismissal for gross misconduct. Failure to serve notice can sometimes save on payment of bonuses.

Politics

Gross misconduct dismissal should not be used as a management tool. We see dismissals arising where there is a cover up for poor conduct of managers – this is an unfair reason.

Fire first

Some employers think fire first and then work out the consequences if faced with a claim of breach of the employment contract or unfair dismissal.   An appeal to the dismissal can trigger a re-think by the employer.

What does amount to gross misconduct?

There is no set legal definition of gross misconduct. Thus employers enjoy the discretion to define what they consider as gross misconduct. However, it is clear that the gross misconduct must include deliberate wrongdoing or gross negligence. The employee must have acted in a way which fundamentally damages the employment relationship.

Gross misconduct examples:

  • Complaints from staff or customers
  • Theft or fraud: which includes expenses;
  • Serious incapability to perform role: which includes suspected addictions;
  • Falsification or unauthorised removal of company records or property;
  • Act(s) of insubordination;
  • Negligence in the performance of duties; and
  • Failure to comply with internal policies; or those defined by professional institutes and the FCA.

Grey areas

Some of the above, if proven, are fair reasons for instant dismissal in most people’s eyes. However, the position is usually not so clear cut.  The employer may lack clear proof that supports their gross misconduct allegation.

Sometimes employers will dismiss on the basis that the employee has done something which has destroyed the relationship of “trust and confidence” between employer and employee. The concept of trust and confidence is not defined in most cases.

  • Many of the cases we handle fall into the grey areas and we find defences.

Gross misconduct allegations against directors

Directors have duties over and above that of employees.  When a director is being dismissed it is necessary to take into account factors such as:

Fiduciary duties

Directors have  responsibilities and fiduciary duties which extend beyond the duties an employee owes to his employer.  Any charge of gross misconduct has to be looked at in conjunction with an analysis of how it is reasonable to have expected the director to have behaved.  Common debates arise around should the director be the fall guy for the rest of the board?  To what extent is a director expected to take responsibility for his team?

Obligations

The obligations which can be imposed upon a director to promote the business are of a higher level than those that can be placed on an employee.  What would be reasonably considered as gross misconduct if the act is taken by a director may not be gross misconduct if taken by a more junior member of staff.

Office of director

Firing the director may remove him from employment but may not remove him automatically from the office of director.  A review is needed of the director’s service agreement and the powers of shareholders to remove the director under the articles and shareholders’ agreement.

Impact on share rights upon dismissal for gross misconduct

For employees and directors who are shareholders or option holders it will be necessary to consider the impact of a gross misconduct finding on share rights. In law, the employment agreement or director’s service agreement is a separate legal document to the rights governing share ownership. In practice this means:

Exclusion of liability under option agreements

Employers are able to exclude liability for dismissing unfairly from the option agreement.   But, express exclusion of liability clauses are needed in the documentation. The exclusion of liability may not extend to contracts involving shares if the share rights have been set out in employment documentation.

Share rights

Share rights are usually governed by a different set of rules which stem from the Companies Act and common law.  It is harder for an employer to exclude liability for dismissing unfairly.  There are protections you may be able to benefit from such as the common law rule that any discretionary decision must not be taken capriciously.

Under the Companies Act minority shareholders have the right not to be prejudicially treated. Any shareholder can apply to Court for orders that certain actions are taken or not taken as the case may be.

In private companies the question of how much your shares are worth if you are forced to sell upon dismissal frequently arises. There is no straight forward answer.  Your position will depend upon the facts.  We do have expertise in the area of private company shares and share valuations and can work with you to resolve issues.

Fighting back against an allegation of gross misconduct

You are entitled to a fair and reasonable investigation with an opportunity to put your case forward and an opportunity to appeal.

  • We often deal with cases where the employer has not followed a proper procedure or has applied pressure to create evidence that is not genuine.  We are sensitive to the need for most employees to leave with a good reference and do factor that into our approach.

Evidence of gross misconduct

Evidence is crucial. Employers will usually have prepared some evidence to use against you. Our role is to examine what evidence you may have at your disposal to rebut the gross misconduct allegation. We can manage the collection of evidence and pinpoint what will be important to you.

If you have been cut off from the IT system we know that garnishing evidence is difficult. However, employees do have rights to request information.  Also, the litigation process does include an opportunity for discovery. Discovery is a process where if the employer continues to withhold information the court can order that it be disclosed.

Timing

It is important to act quickly in these circumstances as any claim to an employment tribunal needs to be made three months less one day from the date of the dismissal. Before making a claim to the employment tribunal the case must first be referred to ACAS for early conciliation. We can help you navigate through this complex process.

Two years’ continuous employment

The requirement to have at least two years continuous employment applies equally to unfair dismissals arising from a gross misconduct dismissal as it does to other forms of dismissal. This means if you do not have two years continuous employment you cannot claim unfair dismissal.

Settlement agreement

settlement agreement is a common tool of dispute resolution.  We will review, negotiate and settle for you. We also deal with announcements to the market and internal announcements – always working to preserve your reputation.  We agree references which exclude any reference to the alleged act.

Resolving gross misconduct allegations – track record

  • Negotiating on behalf of a director dismissed for gross misconduct for claiming the reimbursement of his partner’s hotel bill, for which he was not entitled to claim. During the negotiations it transpired that the true reason for his dismissal was that the other directors no longer wanted him on the board. We were able to negotiate an enhanced settlement agreement which reflected his current remuneration package.
  • Our client was in a senior position within an investment bank. We advised her to raise a grievance against her employer who had initiated a disciplinary action for poor performance. The disciplinary was heading towards dismissal for gross misconduct. We put forward a strong case of bullying and challenged the evidence supporting the allegation and on the strength of these the employer decided to settle.
  • Challenged evidence in support of a dismissal for gross misconduct revealing the true reason for the dismissal which was discrimination on the grounds of disability.
  • Negotiated a fair price for a dismissed director/shareholder of an IT company who was forced to sell his shares following a dismissal. Our advice extended to tax advice on the gain.

An accusation of gross misconduct is stressful for any employee or director. Many issues come into play. We are sensible and will always give you a realistic overview on the strength of your defence to gross misconduct and the likely outcomes. 

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