What constitutes a reasonable investigation?

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One of the key steps in ensuring that a fair procedure is followed during disciplinary proceedings is carrying out a reasonable investigation to establish the facts of the case and whether or not there is a case to answer.

That sounds straightforward but it is something many employers get wrong. As a result, even though there may well be a potentially fair reason for dismissal, an inadequate investigation can render any subsequent dismissal unfair.

When dealing with disciplinary matters (which includes poor performance) it is important to bear in mind the principles of fairness as set out in the ACAS Code of Practice on Disciplinary and Grievance procedures and the supplementary ACAS Guidance. Where misconduct is alleged, employers will also have to satisfy the “Burchell” test (British Home Store Limited v Burchell 1978) whereby, at the time of dismissal:

  • The employer had a genuine belief in the employee’s guilt.
  • It had reasonable grounds for that belief.
  • At the time it held that belief, the employer had carried out as much investigation as was reasonable in the circumstances.

What is a reasonable investigation?

Some useful guidance was given recently by the Court of Appeal in the case of Shrestha v Genesis Housing Association Ltd. The good news for employers is that the Court of Appeal held that, it is the reasonableness of the investigation as a whole that is relevant and an employer does not need to extensively investigate every element of the employee’s defence.

Background

Mr Shrestha was a support worker for Genesis and was dismissed for gross misconduct after fraudulently over-claiming mileage expenses. In 2011, Mr Shrestha made a claim for an “essential car user allowance” worth £1,000 a year. This applied where an employee drove at least 2,500 miles in a financial year and was payable in addition to the usual mileage expenses. Genesis were suspicious as Mr Shrestha’s mileage had never reached that limit before and they decided to carry out an audit. Using the AA route-finder, Genesis discovered that Mr Shrestha was claiming mileage consistently higher than the AA figures, in fact, almost twice as much. The explanation given by Mr Shrestha was that difficulties in parking, one way road systems and road works causing diversions were the reasons for the higher mileage. Genesis also checked the RAC recommended mileage and there was very little different between this and the AA’s.

The disciplinary hearing was chaired by Mr East who discussed two specific trips with Mr Shrestha rather than all of them because he did not consider that there was a plausible explanation for higher mileage to be claimed for every single journey. Mr Shrestha provided the same explanation as before for the high mileage claims. The hearing was adjourned for further investigations to be carried out and this included an analysis of Mr Shrestha’s mileage claims for a three month period in 2010 compared to the same period in 2011. For all these later journeys Mr Shrestha claimed higher mileage than for the previous year and for all the journeys, the mileage claimed was higher than the AA rates.

Mr Shrestha was subsequently dismissed for gross misconduct and his internal appeal against the dismissal was unsuccessful. Mr Shrestha then commenced Employment Tribunal proceedings.

Proceedings

At the Employment Tribunal, Mr Shrestha argued that Genesis had failed to carry out a reasonable investigation and Mr East should have discussed every specific journey with him and should have made some of the journeys himself to see the impact the parking issues, one way road systems and road closures had on the journeys taken. Mr East’s response was that it would not be possible to recreate the same driving conditions on the day and the AA rates took into account one way systems. Whilst on some occasions there may have been road closures and diversions this would not account for increased mileage claims for every single journey. The Employment Tribunal held that the investigation carried out by Genesis had been reasonable and applying the Burchell test, Genesis had a reasonable belief that Mr Shrestha had fraudulently over - claimed mileage expenses. The EAT upheld this decision.

Mr Shrestha appealed to the Court of Appeal. He argued that the Employment Tribunal had failed to apply the Burchell test properly and rather than just considering the reasonableness of the investigation that Genesis had carried out, the Employment Tribunal should also have considered the reasonableness of what Genesis failed to do.

The Court of Appeal disagreed and stated that “To say that 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”. Although an employer must consider any defences raised by the employee, whether and to what extent it is necessary to investigate each specific defence will depend on the circumstances of the case. When assessing the question of reasonableness, the investigation should be looked at as a whole. The Court of Appeal held that the Employment Tribunal had correctly applied the Burchell test and that a reasonable investigation had been carried out. It unanimously dismissed Mr Shrestha’s appeal.

Comment

Although this decision does not change the law in any way, the Court of Appeal has reiterated that an employer only has to carry out a reasonable investigation to meet the Burchell test and does not have to investigate every explanation put forward by an employee. Don’t forget the ACAS Code though. This provides that any investigation should (where practicable) be carried out by a different person from the person who subsequently conducts the disciplinary hearing or appeal. It could be the line manager, someone from HR or an individual with specialist knowledge, for example a member of the IT department if computer misuse is suspected. The investigation also needs to be carried out promptly.

Finally, there is no statutory right for an employee to be accompanied at an investigatory meeting (as opposed to a disciplinary meeting). Neither does the ACAS Code state that an employee should be accompanied at an investigatory meeting. However, an organisation’s own disciplinary procedure may provide for this and if it does, it is essential to be aware of a significant change made to the ACAS Code just a few weeks ago. The statutory companion is either a colleague, a trade union representative, or an official employed by a trade union certified as being competent to accompany a worker. Provided that the worker’s choice of companion is from one of these categories, the employer cannot place any restriction on the choice of the companion although the worker’s request to be accompanied must be a reasonable request. What is reasonable will depend on the circumstances of each individual case. For instance, a worker should provide enough time for the employer to deal with the companion's attendance at the meeting.