Put simply, suspension can in certain cases result in an employee claiming and succeeding in a claim for constructive dismissal. An employee will succeed in a claim for constructive dismissal if he or she can demonstrate that the employer either acted unreasonably (the “reasonableness test”) or breached the employee’s contract (the “contract test”) in suspending him or her so as to justify the employee’s resignation.
The right to suspend an employee should always be reserved in the employee’s contract of employment or employee handbook. If no such right exists, the suspension of an employee may constitute a breach of contract which may ground a claim for constructive dismissal.
Even if the right to suspend an employee is provided for in the contract of employment or staff handbook, the employer must act reasonably when deciding whether or not to suspend an employee pending an investigation. The current generally accepted position is that, even where a right to suspend exists in the contract or staff handbook, a suspension will normally only be justified where necessary to:
- Prevent the repetition of the conduct complained; or
- Prevent interference with evidence; or
- To protect the employer’s own business or reputation.
The issue of suspension was considered in the case of Philip Smyth v RSA Insurance Ireland Limited  4 JIC 1706.
In this case, the Employment Appeals Tribunal (the “EAT”) awarded the former chief executive of RSA Insurance compensation of €1.25 million, one of the largest awards in its history. Mr Smith had brought a case for constructive dismissal after he was suspended for what RSA described as issues in the Irish claims and finance functions which resulted in the company being forced to inject €262 million of emergency capital into its Irish subsidiary. Following his suspension, Mr Smith resigned claiming that he had been made the “fall guy” by RSA for the issues.
In this case, the EAT criticised, amongst other things, the manner in which Mr. Smyth was suspended on account that the suspension was reported on RTÉ with very little notice to the employee. The EAT held that:
“suspending the claimant on national television was the equivalent of taking a sledge hammer to his reputation, to his prospects of ever securing employment in this industry again in Ireland, in Europe and very possibly beyond and it sealed his fate with the respondent forever
” and that the public suspension was in fact “a dismissal, disguised as a suspension
” and was “never acceptable
This case demonstrates that constructive dismissal claims may arise if the employer fails to properly consider the necessity for suspension and the impact that may have on the employee in question.
This article first appeared as part of Legal-Island’s employment law update service. Find out more: www.legal-island.ie