When an employee faces criminal charges can their employer dismiss them?

A recent tribunal ruling has highlighted the risks of dismissing employees suspected of criminal activity. In the case Ms Difolco, a care assistant, who failed to disclose that she had been charged with murder has won a claim for unfair dismissal against her employer Care UK.

The tribunal upheld her claim that Care UK failed to properly investigate whether the charges could reasonably cause reputational damage to the organisation.

Ms Difolco provided personal care to vulnerable residents. She was arrested and charged with murder. Whilst in custody her daughter informed her employer that she would be absent due to covid. The following day she appeared in court where she was bailed. The press reported Ms Difoloco’s name, age and hometown but not her employer or job.

The next day Ms Difolco’s daughter informed the care home manager that her mother had been arrested and charged with murder. Ms Difolco was suspended on full pay, pending an investigation into “a breakdown in trust and confidence and potentially bringing the company into disrepute”.

Care UK’s disciplinary policy stated that if an employee is the subject of a criminal charge it will investigate the facts before deciding whether to take formal disciplinary action. It would not usually wait for the outcome of a prosecution before deciding what that action would be. Conduct outside of work may be treated as a disciplinary matter if it is relevant to their employment.

Care UK held a “fact-finding” meeting with Ms Difolco who explained she was first arrested for murder in January 2022 but not charged until October 2022. The care home manager was also interviewed and explained Ms Difolco had told her before October that police had taken her phone as evidence but did not state why. Ms Difolco admitted she did not have covid but had really been in a police cell.

The investigation report stated that “at no time were management informed by Ms Difolco of her arrest or the charges against her”.

Care UK’s disciplinary hearing found the murder charge was a serious act which “could potentially bring the company into disrepute” and that there had been a “breakdown in trust and confidence” because Ms Difolco had not reported her arrest to management in January 2022.

Difolco’s employment was terminated with a payment in lieu of notice. An appeal upheld the original decision.

Ms Difolco was later acquitted of all charges.

The tribunal found the investigation made “no assessment of any risk of reputational damage” and that “alternatives to dismissal were not considered in discussion with the claimant”.

The tribunal found that whilst there was a procedure (an investigation, hearing and appeal) the procedure had only been applied to the failure to report the charges.

The tribunal stated that even “where the risk is reasonably obvious there requires to be adequate exploration of the matter including the alternatives to dismissal”. The failure to discuss the risk of reputational damage with Ms Difolco meant there was “no adequate exploration” of alternatives. It would not have been a futile discussion because “it would have enabled proper consideration” in discussion with Ms Difolco of “the nature of the reputational risk and the alternatives to dismissal”.

The decision to dismiss Ms Difolco because of the risk of reputational damage without a prior discussion with her was outside “the range of reasonable responses and was accordingly unfair”.

However the judge did find that even if the risk of reputational damage and the alternatives to dismissal had been discussed, Ms Difolco would still have been dismissed and that dismissal would have been fair.

The case highlights to employers that even in cases where an employee has been charged with the most serious of offences there is no automatic right to dismiss. Employers must follow a robust process and thoroughly investigate the issues.

The tribunal found that Care UK was rightly concerned about reputational risk but it failed to take all the necessary steps to show it had fully considered the risk. The risk was not considered during the investigation, the disciplinary hearing or appeal hearing. The key points to note are:

Employers must follow a robust process and thoroughly investigate the issues.

Even where the risk is obvious, employers need to raise it with the employee and give them an opportunity to comment.

Employers need to consider the likely outcome when an employee is charged, how it will affect the employee’s work and the impact to the employer.

Employers should consider alternatives to dismissal and record why they are not appropriate.

Employers can dismiss for reputation damage once all the above steps are completed.

Employers can fairly dismiss an employee accused of criminal conduct even if the charges are subsequently not proven or dropped. Employers do not have to await the outcome of a trial.

The fairest reason for dismissal may be for “some other substantial reason” (SOSR).

The legal test for deciding if SOSR is a fair reason for dismissal is whether an employer followed a fair process and whether it acted reasonably in reaching the decision to dismiss.