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Is it necessary to conduct a disciplinary investigation when there is sufficient evidence available from another source?

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Sarah Henchoz



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10 April 2019

This was the question for the EAT in Radia v Jefferies International, a financial services case in which an employer substituted the findings of an employment tribunal for an investigation, and then went on to use this as the basis for the dismissal. The EAT ruled that relying on the employment tribunal findings as a basis for the dismissal was within the range of reasonable responses in these particular circumstances.

FCA regulated employee and his fit and proper status

Both the employer and the claimant were regulated by the Financial Conduct Authority, the latter being an approved person in his role as Equity Research Analyst. As an approved person, he would be required to maintain a status as a fit and proper person. The employment tribunal, in one of the cases brought by the claimant, made adverse findings about his credibility, saying that his evidence was “not credible in many respects” and “on lots of occasions evasive”, which was of “grave concern” given the claimant was regulated.

Employer relied on tribunal findings rather than conducting an investigation

Relying on the tribunal findings, the employer went straight to a disciplinary hearing and did not conduct an investigation. The claimant was given an opportunity to comment and raise issues at the disciplinary hearing. Ultimately, the claimant was dismissed for gross misconduct on the basis that he could not continue to work as an analyst, which requires a high degree of honesty and probity. The FCA rules state that when assessing a person’s fit and proper status, it is relevant to consider criticism by a court of tribunal.

The factors that influenced the EAT

The factors that were influential in determining whether the employer’s response was within a reasonable range included the following:

  • The findings as to credibility were very damaging to the claimant as a regulated person who must be fit and proper;
  • The employer used the credibility findings as a starting point, and then gave the claimant the opportunity to comment;
  • An investigation is not part of the statutory test for unfair dismissal, nor a requirement of the Acas code of practice on disciplinary and grievance procedures; and
  • There was no further investigation that the employer could have reasonably been required to conduct as the findings spoke for themselves.
Take-away message for employers

This is a helpful case for employers, particularly where there are separate processes (regulatory or criminal) running concurrently in relation to the same set of facts, and duplicating an HR investigation would only serve to tie up resources and prolong the process. That said, this case is very fact-specific, and it should not be taken as ruling that it would always be reasonable to omit an investigation where there is an alternative source of facts to rely upon. The key factor is whether it is necessary to conduct an investigation to establish the facts. If the employer has the facts from a credible source, then it may not be necessary to conduct further investigations. The situation is complicated when a regulatory investigation has been conducted under privilege, and the employer does not want to waive privilege by disclosing all or part of the report to the employee. Fairness would require that factual findings are disclosed to the employee, which would require a separate open HR investigation or the regulatory investigation to be structured in such a way that part of it is conducted on an open basis.

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