Reasonableness of an investigation in a misconduct dismissal

Mr Shrestha (claimant) was employed by Genesis Housing Association Ltd (respondent) as a floating support worker and was required to travel by car to see the respondent’s clients at their homes.

He was entitled to expenses for the mileage travelled. For that purpose he was required to complete an online claim form, giving the reading from his car’s mileometer (rounded to the nearest mile) at the start and end of each journey, from which was calculated the mileage for each journey and the total for each month. The respondent carried out an audit of the claimant’s expenses claims for a three month period in 2011, which revealed excessive mileage. For example, the total claim for July 2011 was for 197 miles, whereas the AA figures for the same journeys totalled 99 miles. The explanation given by the claimant was that the higher mileages claimed were due to a number of factors: difficulty in parking, one-way road systems, and road works causing closures or diversions. This led to a disciplinary hearing in which it was found that that the claimant had been over-claiming mileage expenses fraudulently, as a result of which he was dismissed for gross misconduct.

The claimant presented an ET1 claiming unfair dismissal. The employment tribunal (ET) held that the dismissal was fair applying the test for misconduct dismissal in British Home Stores Ltd v Burchell [1980] ICR 303concluding that although the respondent did not put each specific journey to the claimant and analyse the purported reasons for the additional mileage. This was because every single journey that the claimant had made was above the AA suggested mileage. It concluded that it was simply not plausible that there was a legitimate explanation for each and every journey. The claimant appealed to the Employment Appeal Tribunal who dismissed his appeal. The claimant appealed to the Court of Appeal.

Before the Court of Appeal, the claimant contended that there is a difference between the reasonableness of the employer’s investigation into the original allegations and the reasonableness of its investigation into the employee’s response to those allegations. If an employee raises several lines of defence, the employer must investigate each of them, unless they are manifestly false or unarguable, in order to pass the reasonableness threshold. In this case the claimant put forward a number of interrelated explanations for the higher mileage claimed: parking difficulties, road works, road closures and one-way streets. The employer did not carry out an investigation into those defences, and the ET did not consider whether those failures to investigate took the investigation outside the range of investigations open to a reasonable employer. To put it another way, the ET appears to have considered the reasonableness of what the employer did do, without considering how the overall reasonableness was affected by what the employer did not do. This was the position both in relation to the dismissal stage and to the internal appeal stage.

However, the Court of Appeal rejected the claimant’s contention and dismissed the appeal. The court concluded that to say each line of defence must be investigated unless it is manifestly false or unarguable is to adopt too narrow an approach and to add an unwarranted gloss to the Burchell test. The investigation should be looked at as a whole when assessing the question of reasonableness. As part of the process of investigation, the employer must of course consider any defences advanced by the employee, but whether and to what extent it is necessary to carry out specific inquiry into them in order to meet the Burchell test will depend on the circumstances as a whole.

Shrestha v Genesis Housing Association Ltd [2015] EWCA Civ 94

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