Pubbi v Your-Move.co.uk – Can an employee be fairly dismissed when they have failed to disclose their own misconduct?

Facts

In this case, the Employment Appeal Tribunal (“the EAT”) considered whether a financial consultant, who had not disclosed to his employer that he was bankrupt, had been fairly dismissed for gross misconduct.

Mr Pubbi was employed as a financial consultant by Your Move.co.uk (the employer) in May 2015.

The Employer in this matter was an estate agent and acted as an Appointed Representative of a company called First Complete Limited (“FC Ltd”). FC Ltd was part of the LSL Group of Companies a network of over 2000 brokers and advisers who are authorised and regulated by the Financial Conduct Authority (“FCA”).

Mr Pubbi got into financial difficulties following a period of unpaid sick leave and entered into bankruptcy in January 2018.  He did not inform his employer of this. However, following a Google search, the bankruptcy was subsequently discovered by a member of his Employer’s HR team.

As a result, Mr Pubbi’s authorisation to operate as an adviser through the third-party mortgage business used by his Employer was terminated by FC Ltd, on the basis that he was no longer a ‘fit and proper person’ as required by the FCA Handbook.

The Employer considered that Mr Pubbi’s failure to disclose his own bankruptcy raised serious questions over his honesty and integrity. Following a procedure which was found to have been fair, he was summarily dismissed for gross misconduct by reason of his deliberate and intentional failure to inform his Employer of his bankruptcy. He was dismissed for a second reason namely that he could no longer carry out his role owing to his loss of authorisation with FC Ltd.

Mr Pubbi claimed unfair dismissal.

An employer can only dismiss an employee for one of the five potentially fair reasons; conduct, capability, redundancy, illegality or “some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held”. Once one of the five potentially fair reasons have been established the employer will then need to show that their decision to dismiss lies within the range of reasonable responses open to a reasonable employer at the relevant time.

The procedure followed by the employer when deciding to dismiss is very important and failure to follow a fair and reasonable procedure can render the dismissal unfair even if it was for one of the five potentially fair reasons. The procedure varies according to the reason for dismissal.

Tribunal Decision

Mr Pubbi’s claim of unfair dismissal was dismissed., the tribunal finding that the Employers decision to dismiss fell within the band of reasonable responses.

Mr Pubbi appealed against the Tribunal’s decision on the ground that there had been no contractual term or policy in place that expressly required him to disclose his bankruptcy and on the grounds that the FCA Handbook requirement to disclose bankruptcy did not apply to him because he worked in the estate agency division.

EAT Decision

The EAT dismissed Mr Pubbi’s appeal, upholding the tribunal’s decision that his dismissal was fair.

The main issue for the EAT was whether the Employer was reasonably entitled to take the view that Mr Pubbi ought to have appreciated that he would be expected to disclose something of this sort, notwithstanding the absence of any requirement to do so being spelled out within his contract.

The EAT found that his Employer had been entitled to treat Mr Pubbi’s failure to disclose his bankruptcy as gross misconduct, due the nature of his role, the sector in which he was working, and the high standards of propriety expected of the Employer’s advisers. The Employer’s expectation of a high standard of propriety had been communicated to Mr Pubbi both at the start of, and at points during, his employment. Mr Pubbi did not need a written procedure or a policy to inform him of the importance of disclosing bankruptcy.

What should businesses consider?

There is generally no implied duty on an employee to disclose their own misconduct in the absence of an express term (though the position is different for directors). This case demonstrates that even without an express term, there will be circumstances when an employer can reasonably expect an employee to disclose a serious factual matter, such as bankruptcy. To avoid any arguments, an employer is well-advised to include within its contractual terms an express duty to disclose wrongdoing -both their own and of others if this comes to their attention.

Please contact one of our Employment law experts on 0161 832 3434 if you have any questions regarding the above, or if you require advice relating to implementing or amending workplace policies and procedures.