Suspension
If an employer tries to suspend an employee without pay when he has no right to do so the suspension may amount to a fundamental breach of contract. In this case the employee will be entitled, if he wishes, to treat the contract as repudiated by the employer. He may resign and claim constructive dismissal.
Sometimes an employer may decide that, in order to carry out a proper investigation into a more serious disciplinary matter, such as an act of gross misconduct, it might be preferable not to have the offending employee at work until all appropriate and necessary enquiries have been completed. In these circumstances, an employer will suspend the employee usually on full pay, 'pending a full investigation'. Having completed this initial stage of its disciplinary procedure, the employee will be invited to attend a disciplinary hearing, given the opportunity to answer any allegations put to him and put forward his version of events, before the final decision is made by the employer.
An employer may reserve the express right in the contract of employment temporarily to suspend an employee on reduced or no pay. If the right is exercised the contract will continue to subsist and the suspension will not constitute a termination of that contract of employment. So, even though the employee cannot come to work, there will not be a dismissal for unfair dismissal purposes – as yet.
A term will be implied into the contract that the employer can only exercise a right to suspend on reduced or nil pay if he has reasonable grounds and only for so long as it is reasonable.
In the case of McClory v Post Office the Court had to consider a case where three employees were involved in a fight following which they were suspended for six months. The contract provided that they could be suspended without pay. During this time they received only normal pay and not the pay that they would have received in respect of any overtime that they would have worked if they had not been suspended. They brought a claim for damages for loss of the overtime pay and the Court held that although there was an implied term that the employer would only exercise its right to suspend on reasonable grounds this was on the basis that it would only do so for as long as there were reasonable grounds for so doing. In the event the Court found that the employers were not in breach of such implied terms.
There is no general or implied right to suspend an employee without pay. Thus the burden is on the employer, who claims such a right, to prove he is entitled to suspend the employee.
Of course in following a fair and proper disciplinary procedure an employee should be given the chance to appeal against any decision which the employer reaches regarding his future with the employer.
An interesting and related dilemma is whether, during the period between notification of any original decision to dismiss and the outcome of an appeal, the employee concerned stands dismissed with the possibility of reinstatement (in which case the effective date of termination of the contract will be the date of the original dismissal) or suspended with the possibility of the proposed dismissal not being confirmed and the suspension thus being ended (in which case the date of termination of the contract will be the date the appeal is turned down).
An example of the first scenario is the case of Savage v Sainsbury Limited. There it was held that the existence of a contractual term which provided that 'pending the decision of an appeal to the director against dismissal, the employee will be suspended without pay but if reinstated will receive full back pay for the period of suspension', did not operate to keep alive the employment relationship after the date of the employee’s summary dismissal. Although the employee had the right to invoke an internal appeal procedure which actually survived the termination of his relationship with his employer, the effective date of termination was not altered and was the date when the legal relationship ceased to have effect. Had his appeal succeeded the relationship would have been rescued because the employee would have been reinstated with full back pay.
In Drage v Governors of Bradford High School an employee was suspended pending the outcome of an appeal. The effect of this was that although the employee was notified of his dismissal, that dismissal would not be implemented until the appeal. If successful in any appeal the employee would be deemed not to have been dismissed at all. If unsuccessful, the dismissal would take effect on the date when he is notified that the appeal has not been successful.
Gogay v Hertfordshire County Council and Symbian Limited v Christianson present examples of the two most common circumstances resulting in the decision to suspend an employee during his employment; the first when the employee has been accused of a disciplinary offence and the employer wishes to investigate the accusation in the employee’s absence; the second when the employee has given or received notice of the termination of his employment and the employer is concerned to keep him away from its clients, employees and confidential information (usually because the employee intends to join a competitor) – commonly known as garden leave.
Both these cases highlight the need for employers to exercise caution before suspending employees in such circumstances and represent a significant development in the law of implied terms.
Suspension is not simply a matter of preserving the status quo – Gogay shows that it has far-reaching effects on the employee’s health and reputation and can ultimately be damaging to the employer’s business.
Here the Court of Appeal held that the suspension of a care worker pending the outcome of an investigation into an allegation that the worker sexually abused a child in care was a breach of the implied term of trust and confidence. The Court then went on to hold that the employee was entitled to damages for the psychiatric illness she suffered as a result of that breach.
Gogay shows that employers should consider whether there is a case to answer for suspending, particularly in cases where serious allegations are being made, such as abuse, fraud or sexual harassment. The act of suspension can easily be interpreted by a third party as a guilty verdict. An individual who suffers psychiatric illness as a result of being suspended in breach of the implied term of trust and confidence may bring a personal injury claim against his employer.
In Symbian an application was made for an injunction to restrain C from going to work for a competitor until the end of his six month notice period. Mr C attempted to leave S’s employment during his notice period after he had been placed on garden leave. Symbian serves as a reminder that where appropriate contracts of employment should contain carefully drafted provisions setting out precisely what employees can and cannot do whilst they remain employed, both generally and more specifically during the period of garden leave.
Lay Offs
There may be a temporary cessation of work when there is an interruption or suspension of the employer’s business in respect of the employee, in short a lay-off. Please see our previous legal briefing dated 14 September 2000 on the recent fuel crisis that dealt with this situation in more detail.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
