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Is it Fair to Dismiss an Employee Without Holding an Investigation Meeting?

The Employment Appeal Tribunal (‘EAT’) has held in Radia v Jeffries International Limited UKEAT/0123/18/JOJ that based on the facts of the case it was not unfair to dismiss a Managing Director without holding an investigation meeting. The EAT also held that the employer was entitled to rely on the findings of an earlier Employment Tribunal hearing when dismissing the employee, although the dismissal was ultimately unfair as the employer did not follow an appeal process.

Mr Radia was employed by Jeffries International Limited (the “employer”) from 21 June 2006 until 6 March 2017. The employer is regulated by the Financial Conduct Authority (“the FCA”). In 2009, Mr Radia became Managing Director which is known as a regulated position.

In May 2015, Mr Radia brought his first Employment Tribunal claim against his employer which was unsuccessful. The Employment Tribunal’s findings included that the Claimant’s evidence was “not credible in many respects” and “on lots of occasions evasive” and that he had not told the truth or had misled the Employment Tribunal in a number of respects. They further found that his behaviour as a regulated person would be a matter of grave concern.

When the judgment was sent out to Mr Radia and his employer he remained in employment. Upon receipt of the judgment, the employer wrote to Mr Radia suspending him pending a disciplinary investigation. The suspension letter stated that the basis of the disciplinary hearing was the Employment Tribunal’s finding relating to his credibility. Although the letter referred to “internal investigations,” the employer decided to rely on the Employment Tribunal’s findings and did not investigate the matter further.

The employer subsequently held a disciplinary hearing during which evidence was heard about the Employment Tribunal’s findings and Mr Radia had the opportunity to discuss these findings. During the hearing he stated that his evidence at the Employment Tribunal had been misunderstood.

Following the disciplinary hearing, Mr Radia was dismissed on the basis that findings by the Employment Tribunal about his credibility meant that the Respondent could no longer employ him and he could not be seen as a fit and proper person in accordance with the FCA’s Handbook. In particular, the allegation against Mr Radia was that he had “materially and fundamentally breached” his contract of employment “by acting dishonestly” because he had either not told the truth or had misled the employer in the Employment Tribunal in a number of respects. The employer did not hold an appeal hearing.

Mr Radia subsequently brought a further Employment Tribunal claim which included a claim for unfair dismissal. At the Employment Tribunal hearing Mr Radia’s complaints for unfair dismissal held that the employer had carried out a reasonable investigation in the circumstances given that the misconduct was based the Employment Tribunal’s findings which meant the investigation which could be done was limited.

Mr Radia subsequently appealed the Employment Tribunal’s findings that his dismissal was fair. The EAT supported the Employment Tribunal’s findings holding that the two stages of investigatory and disciplinary meetings are not required by statute or the ACAS Code and it was open to the Employment Tribunal to find that there was no further investigation which the employer could have reasonably been required to conduct before it heard from Mr Radia. This was on the basis that the Tribunal’s findings spoke for themselves. However, Mr Radia’s appeal to the EAT was successful on the ground that the employer did not hold an appeal hearing. The EAT found that the Employment Tribunal did not make sufficient findings to justify its decision that an appeal would have been futile (which would have made the dismissal fair).

This decision illustrates that an employer can rely on an Employment Tribunal’s findings regarding the credibility of an employee and an employer can use these findings as a basis for dismissing an employee for gross misconduct. Further, this decision identifies that in certain circumstances an investigation process is not necessary where the evidence speaks for itself and any investigation is limited due to previous findings.

However, caution is advised when dealing with appeals against dismissals. The ACAS Code and best practice advises that an employer should follow an appeal process and this case signifies that even when a dismissal appears to be fair a failure to follow this process could result in a challenge to the process, as happened in this case.

This bulletin is for general guidance only and should not be used for any other purpose. It does not constitute, and should not be relied upon as, legal advice.
JMW Solicitors is a Limited Liability Partnership.