A recent case involving the well-known Irish retail organisation, Dunne’s Stores, highlights the importance of disciplinary procedures when looking to dismiss employees for gross misconduct. While most employers are aware of this already, this decision introduces some new precedent that employers might not have been aware in respect of enforcing company policies and the use of covert surveillance in the lead up to the disciplinary process.
It's important for employers to specifically take from this review that the Employment Appeals Tribunal (EAT) will frown upon any employer who simply issues an employee a company handbook, without discussing its contents and without updating employees regularly on its terms, and then seeks to discipline them at some later stage in accordance with the policies set out within.
Facts of the Case
Ms. Heffernan was employed by Dunnes Stores in 1999 at which time she received an induction into the company and was issued with a copy of the employee handbook which outlined the company’s rules and procedures. Ms Heffernan claimed at the EAT that she received no further training throughout the course of her ten-year employment, nor did the company ever again make any reference to the policies and procedures outlined in their handbook.
Loyalty Card:
One such policy in the handbook concerned the Dunnes Stores customer loyalty scheme whereby customers of the store would receive a Value Club Card. Most readers will be familiar with the system whereby a customer would scan their loyalty card when making purchases at a store and the card will then accrue points based on the value of their purchases. The customer can accrue points through the scheme and these points can then be converted and redeemed as discount vouchers. Abnormalities in this loyalty scheme were identified in the store in which Ms Heffernan was employed resulting in Ms Heffernan being asked to attend a meeting with management on the 25th May 2009.
When questioned about the abnormalities in the scheme, it transpired that Ms Heffernan was scanning customer purchases onto to her own Value Club Card and as a result, she was accruing points and vouchers on the basis of other person’s purchases. Ms Heffernan, who had accrued up to €110 on her card through customer purchases, stated that this was normal practice as customers would tell her to add the points to her own card as a gesture of gratuity for her assistance and she claimed that other staff did likewise. Ms Heffernan was notified that she was suspended from work on full pay until the 28th May 2009 and that she was to attend a disciplinary hearing on that day.
Disciplinary Hearing:
At the disciplinary hearing, Ms Heffernan stated that she was very sorry about what had happened, that it was totally out of character for her, but that other employee had been doing likewise. The Store Manager, however, highlighted that it was essential that a bond of trust exists between employer and employee and having reviewed both the number and value of transactions, the Store Manager stated that he had no option but to terminate her employment with immediate effect.
Appeal Hearing:
Ms Heffernan appealed the decision to dismiss her. However, no appeal hearing was held as she was not given the right to attend an appeal meeting. Instead, the Regional Manager for the company wrote to her on the 15th June 2009 affirming the decision to terminate her employment.
Legislation
Ms Heffernan took a claim under the Unfair Dismissals Acts, 1977 TO 2007, and the Minimum Notice and Terms of Employment Acts, 1973 to 2005.
EAT Determination
While the tribunal acknowledged that Ms Heffernan engaged in inappropriate abuse of the club card scheme, which could have amounted to fraud and theft, the tribunal noted that it is obliged to consider the reasonableness of the employer’s conduct in going about the dismissal process. In doing so, the tribunal identified a number of key flaws in the process adopted by Dunnes Stores.
Covert Surveillance:
The EAT commented on how the investigation was carried out in a covert manner, allowing the employee to continue using her club card in this fashion while they investigated the misconduct. Essentially, the company allowed Ms Heffernan to continue this practice without notifying her that what she was doing was unacceptable and then subsequently disciplined her on foot of information gathered.
The Use of Handbook Policies in a Disciplinary Process:
Importantly, the EAT, in considering the fact that Ms Heffernan was disciplined for breaching company policy in her handbook, stated the following:
“The respondent pointed to their own handbook as being the source of the rules and practices appropriate to the workplace. The reference to the misuse of the value club card is unavoidable therein but the proposition that all employees know the content of the handbook inside out and refer to it daily is not sustainable. The onus is on the respondent to update and remind employees of what is expected of them in the workplace at staff meetings, circulars and through notifications on staff notice boards.
Thus, the EAT found that employers had an obligation to remind staff of the company handbook rules and policies and to ensure that employees are kept up-to-date on company rules and procedures. Otherwise, any disciplinary action taken for breach of such rules may be deemed unreasonable.
Lack of An Appeal:
The EAT also noted that the appeal procedure that Dunnes Stores adopts in these scenarios is flawed, stating that “the Tribunal cannot accept that the appeal conducted internally by the respondent had any regard for the principles of natural justice. It was unreasonable to conduct an appeal without reference to the claimant and this is a practice that needs revision by the company.”
Conclusion
Ultimately, the EAT determined that Ms Heffernan was unfairly dismissed and Dunnes was required to pay out €24,000 in compensation under the Unfair Dismissals Acts 1997 – 2007 and a further €2,190 under the Minimum Notice and Terms of Employment Acts 1973 – 2005. This award was largely based on the company’s poor communication with its staff in relation to the company policies they had in place.
Therefore, it is simply not good enough to hand an employee a company handbook at the beginning of their employment and then store it away for the remainder of their employment.
In conclusion, employers should take on board the following key guidelines:
- Ensure that all staff are regularly updated about company rules and procedures. Employers could, for example, hold regular update meetings with employees and follow up with an associated memo to ensure that any outstanding questions from staff can be addressed accordingly.
- During a disciplinary hearing you should clarify whether the employee was aware of the company rules and regulations that they have broken at the time the misconduct occurred.
- If you are unsure about certain details of an incident, you should always carry out an investigation. This is extremely important if the misconduct in question may be deemed to be gross misconduct. A thorough investigation can ensure full facts are gathered before a disciplinary hearing is entered into and allows an employer to make a more reasoned decision in the long-run.
- Best practice dictates that the right to appeal a decision is always given to an employee and the employee is given the right to attend an appeal hearing and not simply issued with an outcome letter.
If you would like further complementary advice on gross misconduct from an expert, our advisors are ready to take your call any time day or night. Call us on 0818 923 923 or request a callback here.
