The recent Judgment of Mr. Justice O'Keeffe, Higgins and Another - v - Governor & Co of the Bank of Ireland [2013] IEHC 6, followed a trial that ran for 51 days. A manager of the Defendant bank had been placed on a lengthy period of special paid leave, during which time the bank conducted enquiries which eventually resulted in dismissal for gross misconduct. The Plaintiff sought damages for wrongful dismissal, conspiracy and defamation. The Judgment is interesting, not only because of the length and complexity of the trial, but also because it canvasses various legal issues of relevance to internal employer processes and suspensions from the workplace, as Barry Reynolds, Partner, DAC Beachcroft, Dublin, explains.
The allegations against the Plaintiff related to serious non-compliance with banking procedures such as, among other things, failing to lodge cheques directly to payee accounts.
1. The Bank's Findings
The bank found that the Plaintiff knowingly and repeatedly breached procedures in a manner which exposed the bank to the risk that improper transactions would occur. The bank's internal rules set out in unambiguous terms the compliance standards expected of all staff. The chair of the disciplinary process found that the breaches constituted gross misconduct. They destroyed the necessary bond of trust and confidence. In the circumstances, the appropriate sanction was dismissal.
2. Suspension and Fair Procedures
The Plaintiff alleged that his rights to natural justice were breached both in the internal disciplinary process and in placing him on suspension. The bank differentiated between "suspension" and "special paid leave", the former being part of the employee's record and the latter being imposed only to facilitate an investigation. There was a dispute as to the terminology used when placing the Plaintiff on leave. The bank contended that he was on "paid leave" and that he was not "suspended". It was entitled to impose such leave by virtue of custom and practice within the bank and, as it was not punitive, the rights to natural justice did not arise.
The Plaintiff also alleged that the internal procedures were deficient including the alleged non-production of an employee "accuser" for cross-examination and the failure to offer an appeal.
3. The Findings of the Court
The Court held that the Plaintiff had failed to prove conspiracy. There was no agreement between persons within the bank calculated to injure the Plaintiff or to employ unlawful means to deny him fair procedures. The Court concluded that his case arguably fell on that basis. However, it went further and concluded that the disciplinary enquiry was conducted lawfully. Furthermore:
a) Many of the issues raised by the Plaintiff regarding the conduct of the disciplinary enquiry, its findings and the sanction imposed were appropriate to be determined under Unfair Dismissal legislation as opposed to High Court proceedings. In any event, the Court was satisfied that the bank discharged the disciplinary function in a fair, truthful and measured manner.
b) The Court accepted that it is preferable to provide for special leave in written procedures. However, it concluded that "the placing of the Plaintiff on special leave was for investigative purposes and was lawful and that the rules of natural justice did not apply". The duration of the period of leave was unforeseen when it was imposed. Case law draws "a distinction between suspension where disciplinary action is being taken and suspension which is made as a holding operation pending enquires and to investigate a matter... the rules of natural justice do not apply" to a holding operation as distinct from suspension imposed as a form of disciplinary action which would have consequences, both financially and reputationally, for the person concerned.
c) The Court considered the justification for placing employees on special paid leave and stated that the employer is "best equipped to consider whether investigative action should be taken. It must also be remembered that the [bank] is a commercial bank having responsibilities to shareholders, employees, depositors and customers and in particular statutory and regulatory obligations." It accepted that periods of paid leave may be necessary and good administration. On the facts of this case the special leave did not amount to circumstances where the implied term of trust and confidence arose.
d) Interestingly, the Court held that that implied term of trust and confidence did not require the employer to disclose to the employee "all complaints of every character of which the employer might have been made aware". The Court continued: "The employer is entitled to decide the issues on which it proposes to take action against an employee as it did in this case". This issue arose from the non-disclosure to the Plaintiff of the identity of a potential witness and reliance instead on the evidence arising from an audit. The Bank was entitled to rely on evidence as it saw fit.
4. Conclusions
If a process is the "pure evidence gathering type", natural justice will not apply. Likewise, if a suspension is for holding purposes, as opposed to being punitive, those protections will not arise. The Courts in this case, as in a number of previous cases, such as McLoughlin –v- Setanta Insurance Services Limited [2011] IEHC 410, have shown that, where appropriate in all the circumstances, they may be prepared to take a pragmatic view of how an employer applies its policies governing special paid (or similar) leave. However, the Courts will scrutinise employer policies and procedures. It is essential that employers have in place robust written contracts and policies so as to facilitate them taking appropriate measures to address suspected wrongdoing.
Full Decision:
http://www.bailii.org/ie/cases/IEHC/2013/H6.html
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