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Does an employee need to be “culpable” for a misconduct dismissal to be fair?

To fairly dismiss an employee, three elements are required:

  • The reason for the dismissal must be (at least) one of the statutory potentially fair reasons.

  • It must be reasonable in the circumstances for an employer to treat that as a “sufficient” reason for dismissal.

  • A fair procedure must be followed. If an employer falls down on one or more of the above, the employee’s dismissal will be unfair.

Misconduct is one of the potentially fair reasons.  Some misconduct dismissals can be straightforward, for example, where an employer catches an employee red-handed with their hands in the till.

However, misconduct dismissals can be more complex where the nature of the misconduct is quite specific to the employer and/or where the misconduct does not appear that “bad” to a different employer or to an Employment Tribunal (ET). The recent EAT case of JP Morgan v Ktorza highlighted this.

In that case, Mr Ktorza worked in the sales team in JP Morgan's foreign exchange desk. The desk also had a trader team, which Mr Ktorza worked closely with.

He was dismissed (for misconduct) for a practice known as “short-filling”. This practice had previously been common and accepted amongst the sales team. However, JP Morgan maintained that they had since delivered training to the sales team, which indicated that only the trading team were permitted to “short-fill”. Mr Ktorza denied this. There was no suggestion that Mr Ktorza was dishonest and seeking personal gain.   The ET decided that Mr Ktorza’s dismissal was unfair on the grounds that they did not consider his conduct “culpable”.

The bank appealed the ET’s decision, and the EAT upheld the appeal and sent the case back to a different ET to be considered again on the following grounds:

  • The first stage of a conduct dismissal requires an employer to simply show that the employee’s “conduct” was the reason for the dismissal.

  • It is not necessary for an employee’s conduct to be “culpable” or “reprehensible” and/or for the employee to know that their employer would “disapprove” of what they were doing.

  • When considering whether an employer acted reasonably in treating the employee’s conduct as a “sufficient” reason for dismissal, an ET must not substitute their own view regarding what they would have done in the employer’s shoes. The ET fell foul of this in this case.

What does this mean for you or your business?

The above case is a useful reminder that employers can determine, within reason, what constitutes misconduct in their organisation, even if that might not look particularly “culpable” to those outside the organisation.

However, an employer must then consider whether the employee’s misconduct is a “sufficient” reason to justify their dismissal.  This will involve considering a wide range of factors including:

  • The employee’s previous disciplinary record, including any “live” warnings.

  • Whether the employee has committed similar misconduct before.

  • Remorse and

  • Any damage or loss which was actually caused or could have been caused to the organisation as a result, including reputational damage.

Employers must also remember the following when dismissing for misconduct:

  • An employer must genuinely believe that the employee is “guilty” of the misconduct and must have reasonable grounds for believing this.  To have reasonable grounds for the belief, the employer must have conducted an appropriate investigation into the alleged misconduct. Provided that an employer meets this test, it does not matter whether the employee is actually guilty of misconduct.

  • If you have an internal disciplinary procedure, ensure that you follow it, especially if it is contractual.

  • The Acas Code applies to dismissals for misconduct, and ETs can increase compensation by up to 25% if an employer unreasonably fails to comply with the Code, so make sure that you do! 

What should you be doing now?

  • Review your Disciplinary Procedure, if you have one. Ensure that:

    • it sets out comprehensively what constitutes misconduct or gross misconduct within your organisation; and

    • it is up to date and reflects the Acas Code as far as possible.

  • Ensure that managers are aware of and understand the Disciplinary Procedure, and give training and/or refresher training as required.

  • Get managers to sign an attendance register or similar and ensure that training records are kept.


These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.

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