A key practical point arising from the EAT’s decision in Gondalia v Tesco Stores Ltd is the comment that in suspected misconduct cases the criminal law test for dishonesty does not apply. In this case Gondalia (G), a cashier, took advantage of a policy which gives customers a ‘double the amount of an overcharge’ refund if a product goes through a checkout at full price when it is marked as a discount. G bought a number of full price Easter eggs which should have been discounted. She then obtained a double the difference refund of £18 and was dismissed for gross misconduct.

An employment judge rejected G’s unfair dismissal claim. The employer genuinely believed G had committed gross misconduct by taking advantage of the refund policy and she had admitted what she had done, although she did not think she had done anything wrong. G’s actions fell within the definition of gross misconduct, as an employer must have absolute trust in its employees, particularly when it comes to money. G appealed, arguing that as her honesty was at issue, the test in the criminal law case, R v Ghosh 1982 QB 1053 should apply, i.e. when assessing the conduct in question, (i) was it dishonest in accordance with the ordinary standards of reasonable and honest people?; and (ii) did the person realise, according to objective standards, that what he or she was doing was dishonest?

The EAT commented that while it may be that in the future it will be necessary to consider whether it is helpful or sensible to import into employment law guidance on directions to a jury as to dishonesty in a criminal case, it may be far too complicated to bring a yet further consideration into the steps in deciding whether a dismissal has been fair or unfair. Therefore, it was not an error of law for the employment judge to fail to apply the Ghosh principles. In any event, the reason for dismissal did not involve dishonesty, but was unacceptable conduct, so the question to be asked under S.98(4) of the Employment Rights Act 1996 is whether, in the circumstances, the employer acted reasonably or unreasonably in treating the dishonesty as a sufficient reason for dismissing the employee. Note, however, the EAT found the judge's finding of a fair dismissal to be inadequately reasoned and the case was remitted to a fresh tribunal.

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