K v L (UNFAIR DISMISSAL)

An employee must receive clear notice of every ground on which dismissal may be based. An investigatory report may assist in interpreting a disciplinary complaint, but it cannot introduce a separate ground such as reputational damage.

Where dismissal is for misconduct, the employer must form a reasonable belief based on evidence. It cannot dismiss because misconduct remains a possibility or because the employee cannot guarantee innocence. The applicable civil standard is the balance of probabilities.

A dismissal for reputational damage may sometimes be fair although the underlying conduct is disputed. The employer must nevertheless have substantial, reliable evidence that can be scrutinised and challenged. Unknown or undisclosed material, and a speculative future prosecution, cannot reasonably sustain that ground under Employment Rights Act 1996.

The claimant, a teacher with an unblemished record, was charged after police found indecent images on a computer in his home. The Procurator Fiscal decided not to prosecute. The respondent employer investigated, received a redacted Crown Office summary which was not provided to the disciplinary decision-maker or the claimant, and dismissed the claimant.

The invitation to the disciplinary hearing referred to a police investigation and its relevance to teaching. The dismissal letter also relied on a claimed risk of future reputational damage. The Employment Tribunal rejected the claimant’s unfair-dismissal claim.

On appeal, the central issues were whether the claimant had notice of reputational damage as a dismissal ground, whether a dismissal could rest on unexcluded possible misconduct, and whether the evidence could support a reputational-risk dismissal.

1. Appeal allowed. The Employment Appeal Tribunal substituted a finding of unfair dismissal and remitted the case to the Employment Tribunal for remedies.

2. The disciplinary invitation gave notice of an allegation of misconduct, not a distinct ground of reputational damage. Although the investigatory report mentioned possible reputational loss, it could not supply a wholly separate basis for dismissal. Reputational damage secondary to alleged misconduct raises connected but distinct considerations. The claimant had not been given a fair opportunity to address that ground.

3. The employer could not dismiss because it was unable to exclude the possibility that the claimant had downloaded the images, or because it lacked an absolute guarantee of his good conduct. Under section 98 of the Employment Rights Act 1996, reasonableness and equity required application of the balance of probabilities. The decision-maker had already found insufficient material to conclude that the claimant was responsible. That should have ended a misconduct-based case.

4. The Employment Judge made no material error concerning the adequacy of the investigation. The question of reasonableness requires consideration of what the employer did against what it reasonably ought to have done. On the facts, the Crown Office restriction prevented disclosure of its material to the claimant, and the employer was not obliged to tell him that it had sought that material.

5. In alternative reasoning, the Tribunal held that Leach did not justify dismissal for reputational damage. A reputational dismissal can be fair without a finding that the employee committed the underlying conduct, but it requires substantial evidence open to scrutiny and challenge. Here the relevant Crown material was unavailable to the claimant and the decision-maker, and could not be critically analysed. The prospect of future prosecution was speculative after the Procurator Fiscal had decided to take no action on the available evidence.

6. The mutual duty of trust and confidence could not independently justify dismissal. It was not a convenient label to use where the alleged conduct ground had failed.

• Employment Appeal Tribunal: appeal allowed; a finding of unfair dismissal was substituted and the case remitted to the Employment Tribunal for remedies.
• Employment Tribunal: rejected the claimant’s unfair-dismissal claim. No citation was stated in the judgment.