Sometimes the unthinkable happens. For many employers, being informed that one of your employees has been convicted of a crime and will be facing time in prison is one of those moments.

This type of incident will hopefully not arise too often, but you need to react promptly and understand what you can do within the limits of the law. Before taking any action, you must consider:

• the nature of the offence committed
• the duration of the sentence (remembering that offenders normally serve only a half of their sentence)
• the type of role performed by the employee
• the impact the conviction has on the organisation and its reputation
• the employee’s previous track record and employment history.

This is not a full list of factors, but generally you need to consider all the issues related to the employee’s conviction.

‘Frustration’ of employment contracts

If an employee gets a long custodial sentence, an employer may argue that the employee’s employment contract has been ‘frustrated’. This means that an unforeseen circumstance makes it impossible for the parties to fulfil the terms of the contract. As such, the employment relationship between the employer and employee is automatically terminated. As this type of termination is not considered a dismissal, the employee cannot bring a claim for unfair dismissal.

Employment Tribunals do not always look too kindly on employers who have decided to terminate the employment contract in this way. It is generally advised to take the disciplinary action or dismissal route.

Dismissal

If an employee is sent to prison, it may be fair for the employer to dismiss the employee.

A dismissal will be considered legally fair when an employer can show that the reason for the dismissal was:

• related to an employee’s conduct
• related to the employee’s capability or qualification for the role
• redundancy
• a statutory restriction that prevents the employment continuing
• some other substantial reason that justifies this action.

The fact that your employee has been sent to prison could come under ‘some other substantial reason’. On this basis, if the employee has been handed a long prison sentence, it may be fair for the employer to dismiss on the basis that the employee will be unable to perform the duties set out in their contract of employment.

Alternatively, it may be fair for you to dismiss the employee because of their conduct. For example, an employee’s role may involve handling money and having access to the employer’s bank account. If they have committed a crime such as fraud or theft, then no one would reasonably expect they could continue in that role for you.

Importance of fair procedures

Failing to follow a fair procedure is where it can all go all wrong for employers. Before you decide whether dismissal is the best course of action, you must consider all the facts and, if possible, try to get the employee’s views.

A case from early 2016 serves as a warning to employers. An employee had worked for his employer for a number of years. He was sentenced to six months in prison for dangerous driving and public disorder offences and was released from prison after just two months. When he returned to work, he was given a letter terminating his employment on the basis that his employment contract had been frustrated. The employee contested this and the Employment Appeal Tribunal (EAT) made it clear that the employer had not followed correct procedures. The employer had got it wrong in sending out a dismissal letter without conducting any form of investigation. The EAT also stated that the employer could not rely on frustration because when they gave the employee the letter, the employee was already out of prison and he could return to work and fulfil the contract.

Avoid mistakes like this. Get the advice you need from your Employment Law Adviser.