One question for employers to consider is when they can suspend an employee to undertake an investigation into allegations of misconduct without breaching the implied term of trust and confidence?
In the case in Malik v Bank of Credit and Commerce International SA (in compulsory liquidation)  AC20 which for those with long memories was one of the cases following on from collapse of BCCI due to fraud, extortion and other criminal activity, the House of Lords acknowledged the implied term of mutual trust and confidence, which is implied into every contract of employment.
Lord Steyn, in his judgement for the Court, said that an employer shall not “without reasonable and proper cause, conduct itself in a manner likely to destroy or seriously damage the relationship of confidence and trust between employer and employee”. Any breach of the implied duty will constitute a repudiatory breaches of contract which the employee is entitled to accept by resigning.
An act of suspension will constitute such a breach of the implied term where it, by itself, or in combination with other acts or omissions, meets the test imposed by Lord Steyn, that is to say there has been conduct by the employer which (1) is likely to destroy or seriously damages the relationship of trust and confidence; and, (2) is without reasonable and proper cause.
In the Agoreyo case, Miss Agoreyo, a primary school teacher, working on a fixed term contract for a local authority, was suspended by her employer after two teaching assistants accused her of using excessive force against two young pupils with special educational needs. Both children involved had a history of disruptive and challenging behaviour. Prior to the incidents taking place the teacher sought help from the school to deal with the disruptive pupils.
Ms Agoreyo was given a letter of suspension which stated that “the suspension was a neutral act and not a disciplinary sanction……the purpose of the suspension is to allow the investigation to be conducted fairly”. Ms Agoreyo claimed that the act of suspension was a breach of the implied term of trust and confidence by the employer, resigned and raised a claim to the County Court which held that the employer had reasonable and proper cause for suspending the teacher and dismissed her claim. On appeal, the High Court held that it had not been “necessary” to suspend the teacher, and, accordingly, the suspension was a breach of trust and confidence.
Ms Agoreyo appealed to the Court of Appeal which considered the question of when an employer can suspend an employee and concluded that the appropriate legal test to be applied is “does the employer have a reasonable and proper cause for doing so (suspending the employee)”.
The Court of Appeal stated that the question for the Court to assess was;
“whether the way in which the employer had responded to reports received of possible misconduct by the Respondent was reasonable and proper so that matters could be investigated. If that response was reasonable and proper it could not be said that the employer had breached the implied duty of trust and confidence”
In relation to the specific claim by Ms Agoreyo, the Court of Appeal agreed with the County Court and held there was no breach of trust and confidence on the basis that the correct legal test was whether the Head Teacher had reasonable and proper cause to suspend. Accordingly, the teacher’s claim of breach of contract failed.
The Court of Appeal also considered the matter of whether suspension is a “neutral act”, an issue which has been considered elsewhere recently, the background is that it has generally been accepted for many years that suspension on full pay to allow for an investigation to take place was a “neutral” act and not disciplinary action, the Court, in this case, decided that the question of whether suspension was a “neutral” act was “not a relevant question nor a particularly helpful one for consideration of whether suspension was a breach of contract”.
The Court, in setting out its decision, stated that there was no test of “necessity” (as had been suggested by the High Court in its judgement on the Agoreyo case) and the test was one of “reasonableness”. The Court referred to another Court of Appeal case, Gogay v Hertfordshire County Council  IRLR 703 in which an employee was suspended by the Council following allegations of sexual abuse of a child. In that case the decision to suspend the employee was held by the court to be breach of the implied duty of trust and confidence. In the Agoreyo judgement, the Court stated that each case must be considered on the individual merits and that the Gogay judgement was not to be considered to be settled law
Employers, when faced with allegations of possible misconduct by an employee, should take legal advice as to whether a decision to suspend the employee meets the test imposed by Lord Steyn, that is to say there has been conduct by the employer which (1) is likely to destroy or seriously damages the relationship of trust and confidence; and, (2) is without reasonable and proper cause.
The consequence for employers of not taking advice is that the employee may resign and raise a claim for breach of contract with cost, time and reputational implications for the business.
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The information and opinions contained in this blog are for information only. They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice. Before acting on any of the information contained in this blog, please seek specific advice from Gilson Gray.