Can an employee be dismissed for failing to disclose material information? A reminder of the law on unfair dismissal

It is not every day that the Supreme Court concerns itself with matters of employment law, so it is worth commenting on the cases where they do. The most recent one – Reilly v Sandwell Metropolitan Borough Council – concerned the dismissal of a head teacher for failing to disclose her relationship with someone convicted of making indecent images of children.

Here are the facts:

• Ms Reilly was a head teacher at a primary school and her disciplinary record was exemplary.
• Ms Reilly had a close personal relationship with Mr Selwood, although they were not romantically involved. Mr Selwood was arrested and convicted for downloading indecent images of children. Ms Reilly did not disclose either fact to her employer.
• Ms Reilly's employers became aware of Mr Selwood's conviction and Ms Reilly's relationship with him. Following a disciplinary process, it dismissed her for gross misconduct for failing to disclose her relationship with a man convicted of sexual offences towards children and her refusal to accept that this relationship might pose a risk to pupils.
• Ms Reilly brought an employment tribunal claim against her employer. The tribunal found that there was a fair reason for dismissal, but that procedural defects with the appeal process rendered her dismissal procedurally unfair. However, it found that she had made a 100% contribution to her dismissal (meaning she was not entitled to any compensation).
• This decision was upheld by the Employment Appeal Tribunal and the Court of Appeal.

The Supreme Court's decision

The Supreme Court also upheld the tribunal's decision and dismissed Ms Reilly's appeal. It decided that:

1. Ms Reilly was under a duty to "advise, assist and inform" the Governing Body in fulfilling its safeguarding responsibilities towards the school's pupils.
2. Ms Reilly's non-disclose amounted to a breach of that duty which merited her dismissal.
3. Her refusal to accept that she had been in breach "suggested a continuing lack of insight (which) rendered it inappropriate for her to continue to run the school".

Significance for employers

The law on unfair dismissal

In its judgment the Supreme Court provided us with a helpful reminder of the law on unfair dismissal. It is worth repeating that here since this is what tribunals will ask themselves when considering an unfair dismissal claim, and so is what decision makers should consider when deciding whether or not to dismiss:

1. Was there a potentially fair reason for dismissal? For example, relating to an employee's conduct or capability etc.
2. Did the employer act reasonably in treating that reason as a sufficient ground for dismissal (having regard to equity and the substantial merits of the case)?

In considering a misconduct dismissal, the tribunal will apply the so-called Burchell test (from the case of British Home Stores Ltd v Burchell) to the facts:

• Did the employer believe the employee was guilty of misconduct?
• Did it have reasonable grounds to sustain that belief?
• Prior to forming its belief, did it carry out a reasonable amount of investigation into the matter?

Essentially, this requires a consideration of whether the decision falls within the "range of reasonable responses" which a reasonable employer might have adopted.

In setting out these elements, the Supreme Court made some interesting comments about whether the approach in Burchell is in fact correct. Since this was not actually a question before it, the Court did not come to a conclusion, but in raising it as an issue, it feels that the door has been opened for someone to challenge an approach which arguably has favoured employers for a long time – watch this space.

For the time being, however, the Supreme Court acknowledged that the law on unfair dismissal remains unchanged. As a result, it would be sensible for employers to remind decision makers in disciplinary cases of the questions above and encourage them to consider them when coming to a decision.

An employee's duty to disclose material information

Ms Reilly's dismissal resulted from her failure to disclose information about her relationship with someone convicted of child sexual offences, even though there was no evidence that any pupil had actually been at risk. Although the obligation to disclose was not expressly set out in her contract of employment, the tribunal considered that it was "obvious" that failing to disclose it was misconduct. This was partly due to Ms Reilly's senior position at the school, and also the seriousness of the potential safeguarding risk.

What is not clear from the decision is when the duty on employees to disclose is likely to arise and how far it extends. For example, does it only apply to employees in senior positions? Does it only relate to criminal convictions? How close does the relationship have to be? Does it only apply to scenarios with safeguarding implications?

In terms of significance to other employers, the decision is likely to be of particular relevance to those organisations operating in a regulatory environment or where industry rules govern aspects of employee behaviour, such as the senior managers and certification regime / conduct rules in financial services or where there are specific codes of conduct or ethics, such as for lawyers or accountants. It is possible to see how in these areas, an employee's failure to disclose behaviour which could impact on their compliance with such rules could justify disciplinary action and potentially dismissal.

In order to provide greater certainty, it is advisable for employers to give consideration to when it might be desirable for employees to be subject to reporting obligations and to include these obligations in contracts of employment and relevant policies and procedures, setting out what the consequences might be for breach.

Failing to admit an error of judgement

Another significant factor in Ms Reilly's dismissal was her continuing refusal to accept that failing to disclose information about her relationship was a breach of duty. This reinforces the point that an employee's reaction to allegations (for example, whether or not they show remorse) will be relevant to determining the appropriate sanction.

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