Case Law Update: Reputational Damage & Knee Jerk Reactions

The Employment Appeal Tribunal (EAT) has ruled that a dismissal for reputational risk, following the arrest of a teacher on suspicion of downloading inappropriate images of children, was unfair.

K v L

The law

There are two fair reasons for dismissal that are relevant here:

‘Conduct’ and ‘some other substantial reason (SOSR)’.

SOSR is a catch-all category. It provides a potentially fair reason for dismissal where circumstances cannot be classed as one of the other reasons. A fair SOSR dismissal includes the risk of reputational damage to a company for keeping on an employee.

A key piece of legislation in this case is The Employment Rights Act 1996. It outlines that it’s for the tribunal to consider if the employer acted reasonably. It’s up to the company to demonstrate a reason for dismissal that is potentially fair.

Further guidance is provided in the landmark case of British Home Stores Ltd v Burchell. This case outlines criteria for a dismissal to be considered fair. It states that companies must have a ‘reasonable suspicion amounting to a belief that the employee is guilty of the conduct in question’.

The Court of Appeal considered the issue of ‘reputational damage’ in the case of Leach v Office of Communications (Ofcom). Here, the claimant had been dismissed following police disclosures of alleged historic child abuse.

The court agreed that his dismissal had been fair. However, they also outlined that it’s essential that an SOSR dismissal is reasonable.

Background to the case

The claimant in this case was a long-serving teacher at a school. He was arrested and questioned following police intelligence that his home computer had downloaded indecent images of children.

He was later charged, but not prosecuted. The Procurator Fiscal decided to keep the case under review.

The claimant disclosed the ongoing police proceedings to the school and denied the allegations. A decision was taken to implement a disciplinary procedure against him. This led to an investigation into the allegations.

The school could only obtain minimal evidence from the police. The investigation report couldn’t confirm that he’d downloaded the images. However, the school made reference to the reputational risk of maintaining his employment.

He was later dismissed on the grounds of gross misconduct—it was believed he posed an unacceptable risk to children. The dismissal also referred to this reputational risk. It outlined the danger of it later being discovered he had been kept on despite the charges. This would become even more serious if he was later prosecuted.

The claimant brought a claim of unfair dismissal to the employment tribunal (ET).

What did the tribunal say?

The tribunal dismissed his claim.

They agreed that the reputational damage aspect didn’t form part of the initial allegations against him. However, it mentioned that the investigation report ‘reflected’ grounds for dismissal.

The claimant appealed. He argued that the initial complaint failed to mention the reputational damage aspect. As a result, he couldn’t have later been dismissed for it.

He also stated that the school had failed to confirm he had downloaded the images and dismissed him purely on the possibility he had done so.

What did the Employment Appeal Tribunal (EAT) say?

The EAT allowed the appeal, agreeing that the dismissal had been unfair.

They first addressed the reputational damage aspect. They found that an employee could not be dismissed based on a matter that had arisen in an investigation report.

This had not been put to the claimant at the commencement of the disciplinary procedure. It was not mentioned on his invite to a disciplinary hearing letter. As such, he had not been given a fair opportunity to respond directly to this issue. Reputational damage should’ve been treated as a separate consideration.

Despite this conclusion, the EAT did consider if there was a possibility for dismissal to be a fair outcome. They considered this based on a hypothetical scenario where the issue was raised at the start of the disciplinary procedure.

They ultimately concluded it still would not have been. There was no detailed evidence. There was also no existing press interest and the claimant had been honest about the accusations from day one. All of these aspects had been present in the Leach case.

The EAT also took issue with the disciplinary procedure in general. They found that the organisation had not followed the Burchill guidance. They were unable to demonstrate how they had a ‘reasonable suspicion’ of his guilt due to the lack of evidence to hand.

Takeaway points

This is an interesting outcome that addresses the issue of reputational damage head on. If you find yourself in a similar situation you may seek to dismiss the employee straight away. However, you need to ensure that your response is reasonable, given the circumstances.

There is also a lesson specifically relating to reputational damage. If you’re considering this, you need to make it clear at the start of the process. This will allow the claimant opportunity to respond to it.

The case also provides useful commentary on investigations into employee conduct. You need to conduct a full investigation to arrive at a reasonable conclusion. Remember, you’re trying to determine whether the employee committed the act they are accused of.

If you can’t demonstrate this, the result can be a successful unfair dismissal claim. It doesn’t matter how serious the allegations might be, As seen here.

Expert support

If you're concerned with how this ruling may affect your business, speak to a Croner expert today on 01455 858 132.