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Going Quenelle In A Handbasket: What To Do When Employees Damage Your Business

Premier League footballer Nicolas Anelka made the headlines back in December last year after he celebrated a goal by making a controversial gesture known as the “quenelle”. The gesture is considered to be a form of inverted Nazi salute and anti-Semitic, and various pictures have arisen which show individuals performing the gesture outside Holocaust memorials, former Nazi concentration camps and synagogues. Last week, the FA decided that the gesture was abusive and/or indecent and/or insulting and/or improper, and that it included a reference to ethnic origin and/or race and/or religion or belief. However the panel added it did not believe Anelka had been deliberately anti-Semitic.

After the connotations of the gesture became public knowledge, Anelka’s club, West Bromwich Albion, came under the spotlight. The club responded quickly to play down the incident, claiming that Anelka had no knowledge of the racist undertones associated with the gesture. Although the club has now suspended Anelka following the FA’s guilty verdict, pending an appeal and internal enquiry, they had continued to select Anelka to play whilst the FA conducted their investigations, much to the chagrin of the team’s sponsor, property and house prices website Zoopla. Co-owned by a Jewish businessman, Zoopla decided that it would not renew its sponsorship contract, worth £3 million per year, when it comes to an end in May 2014. There is speculation that other sponsors will follow suit now that Anelka has been found guilty. Anelka himself has been banned for five games (with only eleven left to play until the end of the season), which could seriously upset West Brom’s efforts to avoid relegation.

West Brom may therefore suffer significant harm, both in terms of their finances (in respect of both sponsorship and their continued presence in the Premier League) and reputation. Whilst they have so far not looked to terminate Anelka’s contract, other employers may not have been so understanding. An employer whose name is brought into disrepute, or who sees an important commercial relationship with a third party damaged due to the conduct of an employee, could reasonably be expected to wish to dismiss that employee. But is that permitted in law?

The Employment Rights Act 1996 lists five potentially fair reasons for dismissal. One of these is conduct, and if an employee commits an act of gross misconduct he may potentially be dismissed without notice, subject to a fair disciplinary procedure. In addition to the common grounds such as conduct, capability and redundancy, the legislation includes 'some other substantial reason' ("SOSR") as a potentially fair reason for dismissal. What SOSR means is not defined by statute, and it can therefore be a useful “catch all” when the other potentially fair reasons may not apply. However, when relying on SOSR, the reason must be “substantial”, which is a subjective term and will depend on the facts of the particular case.

Where an employee acts in a way that damages or creates a risk of damage to their employer's reputation, SOSR can be a fair reason for dismissal. However, the employer must be able to prove that reputational damage has been or is likely to be caused by the employee's actions. The burden of proof can be quite high in this respect.

Third parties (e.g. suppliers or customers) may also insist on the dismissal of an employee in order to maintain their working relationship with the employer. A dismissal in such cases can potentially be a fair dismissal for SOSR, especially where that relationship is key to the continuation of the business. The motive for the third party's request does not usually need to be taken into consideration, although the employer should be careful to avoid any risk of discrimination against the employee. However, the employer should bear in mind the importance of the continued business relationship with the third party and how serious the third party’s threat may be. A complaint from a minor client about a particular employee without any threat of terminating the business relationship will not be sufficient to render a dismissal fair, but it would be more likely to be fair where a sole or major client makes a genuine threat to terminate a contract unless an employee is dismissed. This is not to say that the employer should not first consider alternatives to dismissal that may satisfy the complaining party, such as redeployment to another part of the business which will have no involvement with them.

As is often the case when employers wish to dismiss their employees, the key consideration will be reasonableness. As long as the employer puts its mind to whether dismissal would be appropriate and follows a fair process, including granting the employee a right of appeal, the dismissal can be fair and the employee can be shown the red card.

This article was first published as part of our Employment Law Update - March 2014.