UK: Reporting Misconduct

This month we look at some of the issues that may arise in relation to employees who have information about other employees' misconduct; whether they are under a duty to disclose it to their employer and whether the employer can protect their identity in any subsequent disciplinary proceedings.

In the recent case of Corus UK v Mainwaring, a tribunal held that an employer acted outside the range of reasonable responses when it dismissed an employee following a tipoff from a colleague (who wished to remain anonymous) without taking a statement from the informant. However, the Employment Appeal Tribunal overturned the decision because the tipoff merely triggered the investigation into the employee's misconduct it did not affect the outcome. Thus it had not been unreasonable for the employer to omit to explore the source further. However, had the employer relied on the information from the colleague in making the decision to dismiss, it would have been obliged to have considered the reliability of the information given by the source, including his or her motives, and to have taken a statement. We look at these issues further below.

Employee informants may tell their employer about fellow employees' misconduct for a number of reasons. They may feel morally obliged to do so or do it out of loyalty towards their employer. On the other hand, they may be motivated by malice or retribution towards the employee they are accusing. However, are they legally obliged to report a colleague's misconduct?

Aside from some relatively rare circumstances where statute imposes such a duty (probably the most common example being a duty to report health and safety failures), a duty to inform might arise in two ways:

(i) by way of an express or implied term in the contract; or

(ii) by virtue of a fiduciary duty.

The latter only arises in the case of company directors, or some very senior employees who by virtue of their position owe a fiduciary duty to their employer. Such a fiduciary duty means that there is a duty to act in the best interests of the employer, which includes reporting any known misconduct by other employees, and even own misconduct, to the employer.

Most employees, however, will not owe fiduciary duties and so a duty to report misconduct will only arise if the contract provides for this. An express duty in the contract to act in the best interests of the company may in some cases be interpreted to encompass a duty to inform the employer of any misconduct committed by other employees. It is also becoming more common to include an explicit obligation, particularly in more senior contracts, to report misconduct. Absent any express terms, it may in some circumstances be possible to imply such an obligation. Again, this is more likely to be the case for more senior employees, and whether there is in fact such a duty will depend on a number of factors which, apart from seniority, include the relevant employee's duties, the nature and seriousness of the wrongdoing and its potential adverse effect on the company.

Where there is such a duty and the employee fails to inform the employer of misconduct of which he or she is aware, the employer may be justified in taking disciplinary action against that employee, which could (in appropriate circumstances) include dismissal.

Many employees fail to report misconduct because they fear that their employer will not believe them (particularly where the misconduct is that of a senior member of staff) or even that they will be the subject of disciplinary action themselves. However, in certain circumstances, an employee who in good faith discloses wrongdoing to his or her employer (whether or not there is a duty to do so) will be protected against any subsequent detriment or dismissal by their employer under the whistleblowing legislation. This will be the case where, for example, an employee discloses a criminal offence or a failure to comply with a legal obligation. An employer should always consider these provisions when an employee has come forward with such information, to ensure that there is no breach of the legislation. In addition, employers are advised to have clear whistleblowing policies in place. This is because a welldrafted and publicised whistleblowing policy will encourage employees to report wrongdoing, while at the same time protecting the employer.

Where allegations are made against an employee by an informant who does not wish for his or her identity to be known to the accused, a careful balance must be maintained between the desirability of protecting an informant who may genuinely fear reprisal, and providing a fair hearing for the employee accused of misconduct. In all cases, the accused must know the essential case against them and be given the chance to state their own case. However, this does not always mean that the informant's identity has to be disclosed. The employer should in most cases be able to ensure the fairness of the disciplinary process whilst protecting the identity of any informant. However, there are certain guidelines that an employer would be welladvised to follow. For example, if allegations by an informant are relied on, a written statement must be taken, the truth of the statement and the informant's character should be properly explored and corroboration should be sought through further investigation.

If disciplinary action is considered appropriate, the statement should be made available to the accused (on an anonymous basis, and redacted if necessary, to protect the informant's identity) so that he or she is given a chance to respond. As there is no absolute right for an accused employee to crossexamine an informant, the employer should be able to proceed with disciplinary action on the basis of the statement alone, provided it has followed the steps outlined above, and such other steps as are reasonable in the circumstances.

It is important to remember that, in a case where a witness is not prepared to disclose their identity, the employer must take particular care in verifying the information given. This is even more crucial (if indeed the information is going to be relied on at all) where an informant does not disclose their identity even to the employer. An employer who fails to consider and act on these issues before dismissing for misconduct, even with the best intentions of protecting the informant, is likely to be found guilty of unfair dismissal.