British Heart Foundation v Roy (Debarred) (Contract of Employment: Wrongful dismissal)

An employee’s actual repudiatory breach of the contract of employment entitles the employer to accept that breach and dismiss summarily. In a wrongful-dismissal claim, unlike an unfair-dismissal claim, the tribunal must determine whether the alleged misconduct in fact occurred. Theft from the employer is an unequivocal breach of the duties of loyalty and trust and confidence, and will ordinarily be repudiatory.

An employer does not affirm the contract merely by conducting a disciplinary procedure before deciding whether the employee committed the alleged repudiatory misconduct. The procedure allows a fair decision to be made; it does not require the employer to continue the contract after it concludes that the misconduct occurred.

The employee, an assistant manager responsible for banking, was dismissed without notice after an investigation into a discrepancy between store receipts and bankings. The Employment Tribunal rejected her claims for unfair dismissal and non-payment of wages. It found that, on the balance of probabilities, she had taken the money, but nevertheless upheld her wrongful-dismissal claim for notice pay.

The employer appealed. It contended that the tribunal had wrongly sought an express contractual power of summary dismissal and had wrongly treated the use of its non-contractual disciplinary procedure as affirmation of the contract. The central issue was whether the employee’s theft entitled the employer to dismiss without notice.

1. Appeal allowed. The Employment Tribunal’s findings compelled the conclusion that the wrongful-dismissal claim failed. The claim was dismissed.
2. Wrongful dismissal concerns whether the employer terminated the contract in breach. Summary dismissal is lawful where the employee has committed a repudiatory breach and the employer accepts that breach. In contrast, unfair dismissal turns on the employer’s reason and reasonable belief; contributory conduct and wrongful dismissal require determination of whether the misconduct actually occurred.
3. The tribunal had found, albeit in qualified language, that the employee had taken the money on the balance of probabilities. Theft from an employer is a plain breach of the employee’s duties of loyalty and of trust and confidence. It was necessarily repudiatory on these facts. The employer therefore did not need an express contractual disciplinary power in order to dismiss without notice.
4. [2001] EWCA Civ 131 supported the contractual inquiry into repudiation. The applicable question was whether the employee had abandoned or altogether refused to perform the contract. By stealing from the employer, the employee had done so.
5. The tribunal also erred in treating the employer’s use of a disciplinary process as affirmation of the contract. A disciplinary process exists to permit a fair and careful decision on whether serious misconduct has occurred. Its use does not prevent the employer from accepting a repudiatory breach once the misconduct is established. The employer’s policy in any event stated that theft was gross misconduct for which dismissal without notice could follow.
6. Section 86 of the Employment Rights Act 1996 did not alter that result. Section 86(6) preserves either party’s right to treat the contract as terminable without notice because of the other’s conduct.

• Employment Appeal Tribunal: Allowed the employer’s appeal and dismissed the employee’s wrongful-dismissal claim.
• Employment Tribunal, Middlesbrough: On 9 October 2014, dismissed the claims for unfair dismissal and non-payment of wages, but upheld the wrongful-dismissal claim. Reconsideration was refused on 28 October 2014.