Suspending employees: What does HR need to know?

The courts recognise that being suspended from work can have a severe reputational and psychological impact on an employee. The Court of Appeal’s recent decision in Agoreyo v Lambeth BC represents a stark change in attitude in assessing when an employer can lawfully suspend an employee from active duties pending an investigation into misconduct allegations.

This article covers:

1. The decision in Agoreyo
2. The costs of getting it wrong
3. When is it reasonable and proper to suspend?
4. Other points for HR

The decision in Agoreyo

Miss Agoreyo was a schoolteacher of 15 years’ experience. She was hired to teach a class of six to seven-year olds, which contained two pupils known to have particular behavioural issues. During her first weeks it was alleged that she had used physical force against one or other of the two pupils, by dragging them across the floor whilst shouting at them.

The school suspended Miss Agoreyo pending an investigation into the allegations. There was no apparent effort to ask Miss Agoreyo for her comments on the allegations or any consideration of alternative measures short of suspension.  After being given notice of her suspension, Miss Agoreyo resigned the same day. She later brought a claim for breach of the implied term of trust and confidence inherent in all employment contracts, which states that “an employer shall not, without reasonable and proper cause, do anything which is calculated or likely to destroy or seriously damage the relationship of trust and confidence between employer and employee”.

The county court held that the implied term was not breached by the school’s decision to suspend the claimant: it was entitled to do so given the strength of the allegations against her.  However, the High Court disagreed, holding that the suspension was a “knee-jerk reaction” to the allegations against the claimant, considering that suspension would only be lawful where it was “reasonable and/or necessary” to do so.

The Court of Appeal restored the county court’s original decision, confirming the test that an employee can only be suspended lawfully where there is “reasonable and proper cause” to do so.  There was reasonable and proper cause, given that the allegations were made by two members of staff in relation to three separate incidents.  The importance of protecting the children was paramount.

The decision is in contrast to Gogay v Hertfordshire County Council, where the claimant (also a teacher) was suspended following an allegation by a single pupil of sexual abuse. The pupil was a troubled child whose account was at times contradictory and not corroborated by any other person.  The claimant was nevertheless suspended and suffered severe psychological injuries causing career-long loss of earnings as a result.  In that case the implied term was breached because the suspension was a “knee-jerk reaction” to a dubious allegation.

The costs of getting it wrong

If suspension is unlawful, it can give rise to a constructive dismissal if the employee resigns, and can also make the employer liable for any psychiatric harm which arises from the suspension. The courts recognise that being suspended from work can have a severe reputational and psychological impact on an employee.

When it comes to deciding whether or not to suspend an employee, the stakes are therefore high. Notably, the financial consequences of an unlawful suspension may be many times greater than dismissing the employee outright. In most cases an employer can give notice of dismissal and only be liable to pay compensation for unfair dismissal, which does not apply at all to those with less than two years’ service and in any case is capped at £86,444 or one year’s salary. Liability for an unlawful suspension, on the other hand, is unlimited.

When is it reasonable and proper to suspend?

The Court of Appeal in Agoreyo emphasised that suspension must be assessed on a case-by-case basis: it is a highly fact-sensitive question as to whether an employer has reasonable and proper cause to suspend. The Court’s decision certainly should not be read as permitting a “suspend first ask questions later” approach to workplace investigations, and suspension should not be seen as a default response to misconduct allegations against an employee.  A careful balancing act should be conducted, taking into account the needs of the investigation (such as independence) and the interests of the employee.

The following factors will be key in every case:

• the nature of the allegations made against the employee;
• the strength of the evidence underpinning those allegations;
• what is at risk if the allegations are substantially true (e.g. vulnerable individuals or children); and/or
• whether a less draconian solution is available, such as prohibiting the employee under suspicion from interacting with staff making the allegations.

Other points for HR

The above factors must be considered every time a possible suspension is in issue, and many cases will involve further points, such as:

• whether there is a power of suspension expressly set out in the contract and, if not, whether there is an implied right to work, which would prevent suspension;
• communicating the decision to the employee: there is no need to say that suspension is a “neutral act” (it invariably isn’t and may have significant reputational consequences for the employee) but the employer must state that it is not a disciplinary measure;
• the employee should remain on full pay and should be made whole in respect of performance-based earnings such as commission;
• treatment of other employees in a similar situation should be consistent, otherwise the employer is vulnerable to claims for breach of trust and confidence or (in some circumstances) discrimination;
• which third parties (such as clients and suppliers) need to be informed and how to announce the suspension internally;
• who is to make the decision as to whether or not to suspend (this might be someone from HR or a person who has been tasked with investigation the allegations); and
• in every case the employer should document the factors weighed up which have led to the decision to suspend.

Ed Livingstone is an associate in the Employment team at Fox Williams LLP and can be contacted at elivingstone@foxwilliams.com or on +44 (0)20 7614 2673.