Investigating misconduct - how far do you have to go?

The Court of Appeal (CA) has recently considered how far employers should go when investigating alleged misconduct. It is well established in case law that for a dismissal to be fair the employer must carry out as much investigation as is reasonable in the circumstances. In the recent case of Shrestha v Genesis Housing Association Ltd, the CA held that a reasonable investigation does not necessarily mean investigating every line of defence raised by the employee. The employer’s investigation should be assessed as a whole.

In unfair dismissal proceedings, an employer must demonstrate that there was a fair reason for the dismissal, and that it acted reasonably in the circumstances in reaching the decision to dismiss. Case law shows that the employer must have a genuine belief (based on reasonable grounds) in the employee’s guilt. The Tribunal will need to be satisfied that, at the time the employer held that belief, the employer had carried out as much investigation as was reasonable in all the circumstances of the case.

In the case of Shrestha v Genesis Housing Association Ltd, Mr Shrestha was dismissed after Genesis found that he had fraudulently inflated his claims for mileage when travelling to clients. Genesis had compared his claims with the distances shown by the AA/RAC mileage calculators. It found that the mileage he had claimed was close to double what it should have been. Mr Shrestha sought to explain the discrepancies by alleging difficulty in parking, one-way road systems and road works causing closures or diversions. Genesis did not review every single journey, but because every journey was above the mileage suggested by both the AA and the RAC, Genesis did not think it was plausible that there was a legitimate reason for the higher mileage for every single journey.

Mr Shrestha brought a claim for unfair dismissal, alleging that the investigation was inadequate. In particular, he alleged that Genesis should have investigated the individual circumstances of each trip, should have driven the same journeys to understand the traffic issues and should have checked whether road works and diversions had been operational during the alleged period.

The CA disagreed with Mr Shrestha and found that, although the investigation was not totally comprehensive, when looked at as a whole, it was reasonable in the circumstances. The CA emphasised that an employer only has to carry out a reasonable investigation; it does not have to do everything possible to investigate every possible explanation put forward by an employee.

This decision is generally positive from an employer’s perspective, confirming that tribunals do not necessarily expect employers to conduct forensic-style investigations into every line of defence advanced by employees in disciplinary situations. However, employers would still be well advised to satisfy themselves that they have taken practical and reasonable steps in the circumstances to investigate the allegations and any explanation given, in order to minimise the risk of exposure to unfair dismissal claims.

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