Employee misconduct happens. When this occurs, in maintaining standards, employers have to take internal action. In more serious cases, the appropriate sanction may be the dismissal of the employee. Indeed, "misconduct" is a potentially fair reason for dismissal under the Employment Act 2006.

It is important to note however that in the event the dismissal is later legally challenged by the employee it is the employer who must show that misconduct was, in fact, the reason for dismissal.

According to the UK Employment Appeals Tribunal in British Home Stores Ltd v Burchell 1980 ICR 303, EAT (an oft-cited case before the Isle of Man Employment Tribunal) a three-fold test applies. The employer must show that:

  1. it believed the employee guilty of misconduct;
  2. it had in mind reasonable grounds upon which to sustain that belief, and
  3. at the stage at which that belief was formed on those grounds, it had carried out as much investigation into the matter as was reasonable in the circumstances.


1. Band of Reasonable Responses

  • Tribunals have to look at all the circumstances of the case when judging the fairness of the dismissal. They would be committing an error of law in looking only at what the employee actually did.
  • The law recognises that employers' may differ in their tolerance for certain types of misconduct. Employers are allowed to have different standards to the employer down the road.
  • Tribunals aren't allowed to ask themselves: 'would we have dismissed in all of these circumstances or only given a warning?' They are not allowed to substitute their view of what they would have done for that of the employer.
  •  A tribunal can only ask whether no employer acting reasonably would have decided to dismiss.
  • This is known as the band of reasonable responses test. Failing to carry out a fair procedure is very likely to put the dismissal outside the band of reasonable responses. 
  • Youth and inexperience may be mitigating circumstances some employers might want to take into account in deciding whether to proceed to dismissal in any given case.
  • Generally speaking it is quite a high bar for ex-employees to overcome to establish that no reasonable employer would have dismissed for the misconduct in question.

2. Consistency of Treatment

  • Inconsistency of treatment is a major reason employers lose unfair dismissal cases.
  • Consistency of treatment is important but this does not mean employers have to treat all employees identically irrespective of the circumstances.
  • But employers do need to guard against undermining the fairness of a future dismissal.
  • But fear of that should not inhibit an employer in being lenient in appropriate circumstances.
  • If someone is not dismissed for what is normally a dismissable offence, it would be vital for the employer to keep a record people could refer to in the future to explain why, despite the importance of the rule, that person was not dismissed.
  • This is to ensure that the employer does not give employees in future cases an argument that the rule was not observed generally and they have been treated unduly harshly.


As an employer, if you only read one employment-law related document in your life, make sure it is this one - the Code of Practice on Disciplinary and Grievance Procedures 2007 (the Code).  It's relatively short [at 30 pages]. It's well written. It is designed to be read by employers, employees and their representatives and to be of use in the workplace.  It applies to disciplinary/poor performance issues leading to dismissals but also action short of dismissal - it will help you develop an instinct for what to do when you can't take advice. It sets out the key features of a fair process.  Tribunals will take its contents into account in the cases they hear. 

Employees cannot bring a claim solely on the grounds that the employer failed to follow the Code – but the fairness of a misconduct/poor performance dismissal will be judged by the standards set out in it.


The recent Manx case of Robert James Costain Sutton v Creechurch Capital Limited [16/35] provides more than a few timely reminders for Island employers as to the proper conduct of disciplinary and dismissal proceedings.


Mr Sutton was employed as a portfolio manager for Creechurch Capital Limited (CCL) between 28 January 2013 and 26 February 2016. On the latter date (having earlier accepted his notice of retirement of 4 January 2016 expiring then) CCL purported to dismiss him for gross misconduct "Because you were found to have "materially breached the Company's policies and procedures".  The gross misconduct relied upon included, inter alia, failing to follow CCL's IT policy and allegations that Mr Sutton's actions had brought CCL and its officers into disrepute.

In Employment Tribunal proceedings for unfair dismissal subsequently brought by Mr Sutton, it was held that he had in fact been dismissed, not by reason of gross misconduct, but because of "protected disclosures" which he had made to the Financial Services Authority in interview on 10 December 2015, preceded by a Suspicious Transaction Report made by him to CCL's compliance officer and deputy on 29 May 2015.  As a result, the statutory cap [currently, £56,000] on Mr Sutton's recoverable damages was not applicable. 

Points of Note

The Tribunal considered on the evidence presented that the decision to dismiss on grounds of gross misconduct had been taken by CCL prior to the disciplinary hearing. The Tribunal noted that employees should be given the chance to have their say before management reaches a decision.

There was a failure by CCL to check with the Manx Industrial Relations Service much sooner to enquire as to the requisite period of notice for any disciplinary meeting to be given. Best practice requires at least 48 hours' notice be given.

The correspondence giving notice of the disciplinary meeting was short on detail of the case that Mr Sutton had to meet. No supporting documents were produced. The Tribunal considered that CCL's investigations generally were inadequate.

Mr Sutton was not informed of those persons who would be involved in the disciplinary process, such that he could consider the appropriateness of the same.


Such was the severity of the procedural failings in this case that the Tribunal issued points of guidance within its [84 page] judgment dated 30 August 2017 as to the proper procedure to be undertaken in a misconduct / disciplinary process.

"370. The Tribunal consider that issues arising during these proceedings highlighted that it is important that Companies provide clear and well-written policies and procedures, designed to give direction and clarity on the company's rules for employees i.e. what is and what is not allowed. This protects the employer from employees not doing what they should be doing, whilst protecting employees by setting the expectations and knowing the limits within which they need to operate.

371.  When introducing new procedures, employees should be trained in any relevant processes. A formal sign-off process should be in place when introducing any policies or procedures.

372.  Good training helps managers achieve positive outcomes, reducing the need for any further disciplinary action. Those responsible for using and operating the disciplinary rules and procedures, including managers at all levels, should be trained for the task.

373.  Ignoring or circumventing the procedures when dismissing an employee is likely to have a bearing on the outcome of any subsequent claim to the Tribunal.

374.  Where practicable, different people should be appointed to carry out the investigation as opposed to the disciplinary hearing..."


What therefore can you, as an employer, do to best arm yourself against a successful claim and avoid paying out needless sums of money to an aggrieved former employee?

At its simplest:

  1. You have to have a good  - or 'fair' -  reason for dismissing the employee, and
  2. You must follow certain procedural safeguards before implementing the decision to dismiss. These are designed to give the employee an opportunity to have their say before the decision is made and that includes a right to appeal against the decision.

This two-fold approach applies to most circumstances that would trigger a decision to terminate an employee's employment: employee's misconduct; redundancy; employee's lack of qualifications for the job; employee's incapability (for example, on grounds of ill-health or lack of skill); where continuing to employ the person would put the employer in breach of legislation or duty, or the catch all category, 'some other substantial reason'.

Discipline and dismissal law is here to stay – it has been forged over 40+ years and there are no active plans to dismantle it. The challenge for employers and HR professionals is to distil the core essentials – for successfully raising standards of conduct and ensuring that, if employees are dismissed for breaching those standards, the employer is well placed with a robust defence.  

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.