Employee must still be paid even whilst suspended on serious fraud charges

We are often asked whether suspended employees must be paid. Unfortunately the answer is usually yes, as has been confirmed by a recent decision.

We are often asked whether suspended employees must be paid. Unfortunately the answer is usually yes, as has been confirmed by a recent decision. The case of Kent County Council v Knowles involved the suspension of Mr Knowles as a senior purchasing manager for a period without pay by his employer Kent CC subsequent to his arrest on suspicion of misappropriating large sums of money, in this case over £200 million into an account which appeared to be in his name or available to him.

The EAT held Kent CC’s appeal had no reasonable prospect of success against the Tribunal’s decision to uphold Mr Knowles claim for arrears of salary for the period between his suspension and subsequent dismissal, some 19 weeks pay. The case serves as a warning to employers that there are limited circumstances in which an employer can suspend an employee for a period without pay.

There was no contractual right to suspend without pay. Mr Knowles was arrested at work but was not remanded in custody. Criminal proceedings were ongoing at the time of Mr Knowles suspension and eventual dismissal and he was charged.  Kent CC argued Mr Knowles had no entitlement to be paid because he had been arrested and suspended on suspicion of serious fraud, a situation brought about entirely by his own actions. Kent CC relied on a previous case where a branch manager of Santander was arrested and charged with 13 criminal offences. However, the branch manager had, as a result of his behaviour, been remanded in custody and therefore derived of his freedom and was unable to attend work. Mr Knowles, however, was not remanded in custody and was ready, willing and able to work during the period he was suspended.  

The EAT accepted the misappropriation (if it occurred – this had still to be proved) would have financial and reputational consequences for Kent CC.  The EAT also had sympathy with Kent CC’s argument that the law should not provide a person in Mr Knowles position salary during a period of suspension when they believe, albeit not yet proved, he was guilty of very serious misconduct. However, because Mr Knowles was ready and willing to work and available as he was not remanded in custody, the fact he was suspended and dismissed, even on a reasonable belief by Kent CC he was guilty of the serious crime that would have a detrimental impact on Kent CC’s reputation and finances, should not preclude him from pay whilst suspended. The reason he was not working is because he was suspended.

The outcome may well have been different If Mr Knowles had been remanded in custody. Advice should be sought, but if that had been the case it would have been open to Kent CC as his employer to find he acted in such a way as to render it impossible for him to work which could remove his legal right to pay whist suspended.

Criminal conviction can often lead to a fair dismissal. However, from a practical point, this is unlikely to assist employers especially in circumstances of serious fraud or other serious criminal charges, as the criminal proceedings are likely to take a considerable period during which the employee should receive payment during any suspension. An alternative, as Kent CC did in the above case, is to hold your own investigation and, if the evidence is there that on the balance of probability the employee is guilty of serious misconduct, dismiss.

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