News & Views

Suspension without pay over £2 million fraud probe – a costly mistake

BY Fiona McBeath
Employment law
BG Purple

Employees under investigation may be suspended with pay under their employer’s disciplinary procedure. 

Suspension without pay is not deemed appropriate, even if the conduct under investigation is an elaborate fraud amounting to over £2 million. 

The suspension with pay, following ACAS guidelines, is not intended as a punitive measure.  It may be required to assist the investigation.  Suspension may not be necessary and in fact may be inappropriate in the circumstances.  It may be that employees can continue to work as normal during the investigation or can be transferred to another location. 

However suspension without pay while an investigation is being carried out and the employee is ready and willing to work is likely to prove costly for the employer, no matter how serious the alleged misconduct, as Kent County Council discovered to its cost. 

Ross Knowles, an energy purchasing manager with Kent County Council, was suspended, initially with pay then without pay, following allegations he diverted over £2 million into an account which appeared to bear his name.  He raised an action to recover payment of his salary withheld by the council between January last year and the date of his dismissal in May last year. 

Mr Knowles argued he was ready, willing and able to work so entitled to be paid and that he non-payment was an unlawful deduction from his pay.  The council sought to argue, unsuccessfully, that as Mr Knowles was not at work during his suspension, he was not entitled to any pay.  He was not entitled to his pay because he had been arrested and suspended on suspicion of serious fraud, a situation that had been brought about entirely by his own actions. 

An employment tribunal ruled he was entitled to his salary for the period of his suspension and the non-payment was an unlawful deduction.  Kent County Council appealed this decision, but following a preliminary hearing the Employment Appeal Tribunal ruled the appeal had no reasonable prospect of success and dismissed it.

Kent County Council now has to pay the salary deducted from Mr Knowles during his period of suspension. 

Incidentally, Mr Knowles was jailed for seven years after being convicted of a £2 million fraud at Maidstone County Court earlier this month. 

The moral of this story is that no matter how serious the alleged misdemeanour, employers are advised to suspend on full pay until the investigatory and disciplinary processes are concluded, in line with the 2009 ACAS Code of Practice on disciplinary and grievance procedures.  Employers should not suspend without pay unless such a measure is provided for in the contract of employment.  When in doubt, employers should call their legal manager.

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