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Reasonable Investigation: Rajendra Shrestha v Genesis Housing Association [2015] EWCA Civ 94

How far does an employer need to go in its investigation of an employee’s defence to a misconduct claim to satisfy the reasonable investigation test set out in British Home Stores Ltd v Burchell [1980] I.C.R. 303?

Pursuant to s.98(4) of the Employment Rights Act 1996 determination of the question of whether a dismissal is fair or unfair (having regard to the reason shown by the employer) depends, amongst other things, on whether in the circumstances the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee. In Burchell the EAT set out a tripartite test in relation to the correct approach to adopt when assessing the issue of the fairness of a dismissal for misconduct. The third stage of the test required that where an employer had formed a belief in an employee’s guilt, and at the stage that belief was formed on reasonable grounds, he had “carried out as much investigation into the matter as was reasonable in all the circumstances of the case”.

In Rajendra Shrestha v Genesis Housing Association Ltd [2015] EWCA Civ 94 the appellant, Mr Shrestha was dismissed for gross misconduct after being found guilty of fraudulently over-claiming on his mileage expenses.  During his disciplinary hearing evidence was presented by his employer in the form of AA and RAC mileage figures that showed his claimed mileage was higher than either of those figures. Mr Shrestha’s defence was that his mileage was higher due to problems with finding parking, one way streets, road closures and road works. 

Mr Shrestha subsequently brought claims against his employer for unfair and wrongful dismissal.  Those claims were dismissed. On appeal he argued that the reasonable investigation threshold could only be met where an employer investigated each and every line of an employee’s defence, unless they were manifestly false or unarguable. In a unanimous decision the Court of Appeal paid short shrift to Mr Shrestha’s submission.  The Court held that to require an employer to investigate each line of a defence unless manifestly false or unarguable was to adopt a narrow approach and to add an unwarranted gloss to the Burchell test. The investigation should be looked at as a whole when assessing the question of reasonableness. This decision will be welcomed by employers.

Elizabeth Dwomoh / 1st Mar 2015


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