Misconduct at Work: Rights, Process & Outcomes 2026

Misconduct at work refers to employee behaviour that breaches workplace rules or contractual duties and may justify disciplinary action. Under section 98 of the Employment Rights Act 1996, conduct is a potentially fair reason for dismissal, but employers must also act reasonably in all the circumstances.

Misconduct can have the effect of damaging an organisation’s reputation as a fair employer or a trustworthy company to deal with. It can cause damage to the property and belongings of the business and can lead to complaints and legal action on the part of employees who bring a grievance or professional organisations such as the Health and Safety Executive.

Given the potential damage that can result from misconduct at work, employers may be able to take disciplinary action against an employee suspected of misconduct. However, in doing so, employers must follow a fair and lawful process, as prescribed by ACAS in its guidelines on workplace discipline.

Where an employer fails to deal with misconduct in accordance with the guidelines, the employee may have grounds to bring an employment tribunal claim.

In this article, we look at how employers should approach misconduct at work issues to reduce the risk of workplace complaints and claims.

Section A: What Is Misconduct at Work?

Misconduct at work refers to conduct by an employee that falls below the standards reasonably expected by the employer and which may justify disciplinary action. In legal terms, misconduct is most significant where it forms the basis of action under section 98(2)(b) of the Employment Rights Act 1996, which recognises conduct as a potentially fair reason for dismissal.

Whether conduct amounts to misconduct is not determined solely by what an employer subjectively considers unacceptable. If the matter proceeds to an employment tribunal, the tribunal will assess both the reason for dismissal and the fairness of the process applied. Employers therefore need to understand not only what behaviour may constitute misconduct, but how that conduct is evaluated in law.

1. Legal definition under the Employment Rights Act 1996

Section 98 of the Employment Rights Act 1996 provides that an employer may dismiss an employee for a potentially fair reason, including conduct. However, establishing a potentially fair reason is only the first stage. Under section 98(4), a tribunal will consider whether, in all the circumstances, the employer acted reasonably in treating that reason as sufficient to dismiss.

This means that misconduct is not defined exhaustively in statute. Instead, its meaning develops through case law and workplace practice. Conduct will usually amount to misconduct where it involves a breach of workplace rules, contractual duties or standards of behaviour that the employer has clearly communicated.

Employers should therefore ensure that expected standards are documented in contracts of employment, disciplinary policies, codes of conduct and relevant operational policies, such as IT, health and safety or anti-harassment policies. Clear documentation strengthens the employer’s position if disciplinary action is later challenged.

2. The Burchell test and the range of reasonable responses

In misconduct dismissal cases, tribunals apply the principles established in British Home Stores Ltd v Burchell [1978]. The employer needs to show:

• that it genuinely believed the employee was guilty of misconduct
• that it had reasonable grounds for that belief
• that it carried out as much investigation as was reasonable in the circumstances

If those elements are satisfied, the tribunal then considers whether dismissal fell within the range of reasonable responses open to a reasonable employer. This recognises that more than one reasonable response may exist in any given situation.

The tribunal does not substitute its own view for that of the employer but assesses whether the employer’s decision was within the band of reasonable outcomes.

For employers, this means that a well-documented investigation and evidence-based decision-making process are central to defending misconduct decisions.

3. Misconduct vs gross misconduct: key legal distinction

Not all misconduct is of equal seriousness. A critical distinction exists between ordinary misconduct and gross misconduct.

Ordinary misconduct refers to behaviour that is unacceptable but does not ordinarily justify dismissal without prior warnings. It may be a one-off lapse or a pattern of behaviour. In most cases, employers are expected to apply progressive disciplinary measures, such as written warnings, before considering dismissal.

Gross misconduct, by contrast, refers to conduct so serious that it amounts to a fundamental or repudiatory breach of contract. It is conduct that is considered incompatible with the continuation of the employment relationship and is often described as destroying mutual trust and confidence. Where gross misconduct is established, the employer may be entitled to summarily dismiss the employee without notice, provided a fair procedure has been followed.

Whether conduct amounts to gross misconduct depends on the contractual terms, the employer’s disciplinary policy, the employee’s role and the surrounding circumstances. Labelling behaviour as “gross misconduct” in a policy does not automatically make dismissal fair; the tribunal will assess the facts objectively.

4. Examples of misconduct at work

Examples of ordinary misconduct may include:

• persistent lateness or timekeeping issues
• failure to follow reasonable workplace procedures
• failure to comply with lawful and reasonable management instructions
• minor breaches of workplace policies

More serious conduct that may amount to gross misconduct, depending on the circumstances, could include:

• theft, fraud or other serious dishonest acts, including falsifying expenses claims
• serious misuse of confidential information or commercially sensitive data
• serious acts of violence, threats, bullying or harassment
• serious breaches of health and safety requirements creating significant risk
• serious misuse of IT systems exposing the employer to reputational or regulatory risk
• serious alcohol or drug-related misconduct in the workplace

Context matters. For example, a health and safety breach in a safety-critical environment may be treated more seriously than a similar breach in a low-risk setting. Likewise, a criminal allegation does not automatically justify dismissal; the employer needs to assess whether the conduct affects the employee’s role or the organisation’s reputation.

Employers should avoid rigid categorisation and instead assess misconduct on a case-by-case basis, applying consistent standards and documenting the reasoning behind any disciplinary decision.

Section B: When Can Misconduct Justify Dismissal?

Misconduct at work does not automatically justify dismissal. Even where an employee has clearly breached workplace rules, the employer needs to show both a potentially fair reason and that dismissal was a reasonable response in the circumstances.

Tribunals assess misconduct dismissals under section 98 of the Employment Rights Act 1996. The employer carries the burden of establishing the reason for dismissal and showing that it acted reasonably in treating that reason as sufficient.

1. Conduct as a potentially fair reason for dismissal

Section 98(2)(b) of the Employment Rights Act 1996 recognises conduct as one of the potentially fair reasons for dismissal. However, establishing conduct as the reason is only the starting point.

Under section 98(4), a tribunal will consider whether the employer acted reasonably in all the circumstances, having regard to equity and the substantial merits of the case. This requires an assessment of:

• whether the employer followed a fair procedure
• whether the decision was based on reasonable grounds
• whether dismissal fell within the range of reasonable responses

The tribunal does not ask whether it would have dismissed the employee. Instead, it assesses whether a reasonable employer could have done so in those circumstances.

For most employees, a minimum of two years’ continuous service is required to bring an ordinary unfair dismissal claim. However, this qualifying period does not apply to automatically unfair dismissals, including certain dismissals connected with whistleblowing, health and safety activities or the exercise of statutory rights.

2. Summary dismissal and repudiatory breach

Summary dismissal refers to dismissal without notice or payment in lieu of notice. It is generally only lawful where the employee has committed gross misconduct amounting to a repudiatory breach of contract.

A repudiatory breach is conduct that is so serious that it entitles the employer to treat the contract as terminated immediately. Examples may include serious dishonesty, violence or conduct fundamentally incompatible with the employee’s role.

Even in cases of apparent gross misconduct, the employer still needs to carry out a fair investigation and disciplinary process. Failure to follow a fair procedure may render the dismissal unfair, even if the underlying conduct was serious.

Employers should also consider whether the misconduct is sufficiently connected to employment. Criminal conduct outside work, for example, will only justify dismissal where it impacts the employee’s suitability for their role or risks serious reputational damage.

3. Warnings and progressive discipline

In cases of ordinary misconduct, tribunals generally expect employers to apply progressive disciplinary measures before dismissal. This involves:

• an initial written warning
• a final written warning for repeated or more serious misconduct
• dismissal where conduct continues or escalates

The precise structure will depend on the employer’s disciplinary policy. Consistency is important. If an employer has previously treated similar conduct less severely, dismissing in a comparable case may fall outside the range of reasonable responses.

There may be circumstances where a final written warning is appropriate without a prior warning, depending on seriousness. However, immediate dismissal without warning is usually reserved for cases of gross misconduct.

4. Automatically unfair dismissal and discrimination risks

Employers also need to consider whether the alleged misconduct is linked to a protected characteristic or the exercise of a statutory right.

Under the Equality Act 2010, dismissing an employee because of conduct arising from disability may amount to discrimination arising from disability unless the employer can justify the treatment as a proportionate means of achieving a legitimate aim. Employers may also have a duty to make reasonable adjustments.

Dismissal connected with whistleblowing disclosures, health and safety activities, trade union membership or certain family-related rights may be automatically unfair, regardless of length of service.

Where misconduct allegations overlap with grievances, complaints of discrimination or protected disclosures, employers should take care to ensure that disciplinary action is not retaliatory and is clearly supported by evidence. Failure to separate these issues properly can expose the organisation to significant tribunal risk beyond ordinary unfair dismissal.

Section D: What Legal Risks Do Employers Face When Handling Misconduct?

Handling misconduct at work carries legal risk at two levels, the underlying decision and the process used to reach it. Even where misconduct is proven, a poorly run investigation, inconsistent sanctioning or an avoidable procedural defect can convert a manageable conduct issue into tribunal litigation. Employers should also treat misconduct cases as multi-issue events, because allegations about conduct regularly overlap with protected complaints, health and safety concerns, grievances and equality issues.

1. Unfair dismissal claims

Where dismissal is contemplated, the primary exposure is an unfair dismissal claim under section 98 of the Employment Rights Act 1996. Employers need to show a potentially fair reason, conduct under section 98(2)(b), and that dismissal was reasonable in all the circumstances under section 98(4). In practice, that assessment tracks two recurring tribunal themes, whether the employer satisfied the Burchell principles and whether the outcome fell within the range of reasonable responses.

Risk increases where the employer moves quickly from allegation to dismissal without testing evidence, where key witnesses are not interviewed, where documentary evidence is not gathered, or where the employee is not given a meaningful opportunity to respond. Employers should also keep qualifying service in view. Ordinary unfair dismissal usually requires two years’ continuous service, but dismissals linked to whistleblowing, health and safety activity or other protected reasons can be automatically unfair regardless of service, and discrimination claims have no qualifying period.

2. Compensation uplift for failure to follow the Acas Code

Employment tribunals take the statutory Acas Code of Practice on Disciplinary and Grievance Procedures into account when assessing disciplinary fairness. Where an employer unreasonably fails to follow the Code, a tribunal can increase compensation by up to 25 percent under section 207A of the Trade Union and Labour Relations (Consolidation) Act 1992. The adjustment can also operate in the employer’s favour where an employee unreasonably fails to comply.

From a risk-management perspective, the adjustment point tends to arise where the employer skips a proper investigation, fails to set out allegations and evidence in advance of the hearing, refuses accompaniment rights in a disciplinary hearing, or denies a genuine appeal. Employers who maintain clean process documents, decision letters and appeal records typically reduce both liability risk and uplift exposure.

3. Constructive dismissal exposure

Misconduct handling can also give rise to constructive dismissal claims where an employee resigns and alleges a fundamental breach of contract by the employer, commonly a breach of the implied term of mutual trust and confidence. This risk is often created by process behaviour rather than the allegation itself.

Examples include unreasonable suspension, an investigator or chair who is demonstrably conflicted, a hostile disciplinary approach, pre-determined outcomes, or reputationally damaging communications. Suspension is a particular trigger where used automatically or maintained without review, even if the employee remains on pay. Employers should document the rationale, confirm suspension is neutral, keep it under active review and consider alternatives where feasible.

4. Consistency and precedent risks

Tribunals frequently examine consistency. Employers who have historically tolerated similar conduct, applied informal resolution, or issued warnings for comparable incidents may struggle to justify dismissal in a later case unless the factual differences are clear and evidenced. Consistency does not require identical outcomes in every case, but it does require coherent reasoning.

Risk also arises where managers apply different standards across teams, where one employee is disciplined and others are not, or where the employer deviates from its own policy without explanation. Employers should keep an audit trail showing how earlier cases were treated, why the current case is different, and how the chosen sanction aligns with the employer’s policy framework.

5. Criminal allegations and reputational issues

Employers sometimes become aware of alleged criminal conduct through police contact, colleague reports or external complaints. A criminal allegation does not, by itself, justify dismissal. The employer’s analysis usually needs to focus on the workplace impact, including whether the alleged conduct affects suitability for the role, undermines trust, creates safeguarding concerns, or creates a material reputational risk in a role-facing or regulated environment.

Parallel criminal processes create practical hazards. Employers should avoid assuming guilt, avoid conducting a disciplinary process as if it were a criminal investigation, and avoid relying solely on the existence of an allegation. The safer approach is to investigate what can properly be investigated in the employment context, assess risk to the business and colleagues, and take proportionate interim steps, including suspension where justified. Where the employer cannot progress fairly because key evidence is unavailable, it may still be possible to reach a decision, but only where the employer can show it took reasonable steps to investigate and reached a conclusion on reasonable grounds.

Section E: Drafting and Implementing a Misconduct Policy

A disciplinary policy is not a formality. It is the operating framework through which allegations are investigated, sanctions are determined and dismissal decisions are defended. Although the Employment Rights Act 1996 does not prescribe a fixed format, employers are expected to align their procedures with the statutory Acas Code of Practice on Disciplinary and Grievance Procedures. A policy that merely exists on paper is of limited value. It needs to reflect the organisation’s structure, risk profile and decision-making culture, and it needs to be applied consistently.

A well-constructed policy reduces ambiguity at the point where tensions are highest. It clarifies expectations in advance and provides a defensible structure if decisions are later scrutinised in tribunal proceedings.

1. What a disciplinary policy should include

At a minimum, the policy should explain who the procedure applies to and in what circumstances it will be triggered. It should distinguish clearly between misconduct and gross misconduct, giving examples while making clear that those examples are illustrative rather than exhaustive. Employers who rely on rigid lists often discover that real-world behaviour does not fit neatly into predefined categories.

The policy should describe the stages of the process in practical terms. That includes how investigations will be conducted, how hearings will be convened, how evidence will be shared and how decisions will be communicated. Sanctions should be set out in graduated form, from warnings through to dismissal, with confirmation that dismissal for gross misconduct may occur without notice where a fundamental breach of contract is established.

It is also important to address procedural safeguards. The policy should confirm the employee’s right to be accompanied at disciplinary hearings, explain how appeals will be handled and identify who will hear them. A transparent appeal mechanism strengthens overall procedural fairness and can correct earlier errors before they escalate into litigation.

Examples of misconduct should reflect the realities of the organisation. In regulated or safety-critical environments, breaches of compliance or safety requirements may carry greater weight than in lower-risk settings. At the same time, employers should avoid drafting in a way that pre-determines outcomes. Labelling conduct as gross misconduct does not remove the obligation to apply the range of reasonable responses test. Each case still turns on its facts.

The policy should also make clear that mitigating factors will be considered. Length of service, previous disciplinary record, personal circumstances and consistency with earlier decisions all remain relevant to the fairness analysis under section 98 of the Employment Rights Act 1996.

2. Training and governance controls

Even the most carefully drafted policy will fail if managers do not understand how to apply it. Disciplinary risk frequently arises not from what the policy says, but from how it is implemented. Line managers and HR professionals should therefore understand the legal framework underpinning misconduct decisions, including section 98 of the Employment Rights Act 1996, the Burchell principles and the requirement to act within the range of reasonable responses.

Training should also address equality considerations. Decisions that appear procedurally sound can still give rise to discrimination exposure if contextual factors are overlooked. Managers need to recognise when allegations intersect with disability, pregnancy, whistleblowing or other protected rights and when further legal input is appropriate.

From a governance perspective, structured documentation helps. Standardised investigation reports, hearing invitation templates and outcome letters promote consistency and reduce avoidable omissions. Central oversight of disciplinary outcomes across departments or locations can also identify emerging patterns, including inconsistencies or disproportionate impact on particular groups. That oversight supports both fairness and compliance.

3. Settlement agreements as a risk-management option

There are cases where the employment relationship has deteriorated to the point that continuing a disciplinary process offers limited commercial benefit. In such situations, employers may explore resolution through a settlement agreement.

A settlement agreement is a written contract that complies with section 203 of the Employment Rights Act 1996 and enables specified statutory and contractual claims to be waived in return for agreed consideration. Properly drafted, it can provide finality and reduce uncertainty where litigation risk is high.

However, the availability of settlement does not displace the requirement for fairness. Employers should not use negotiations to avoid conducting a reasonable investigation or to sidestep procedural safeguards. Where discussions take place under section 111A as protected conversations, they should be approached with preparation and clarity about the limits of evidential protection.

Ultimately, a misconduct policy is not merely a compliance document. It is a risk management instrument. When supported by training, oversight and disciplined application, it reduces reactive decision-making and strengthens the employer’s position whether the outcome is dismissal, retention or negotiated exit.

Summary

Misconduct at work can justify disciplinary action and, in serious cases, dismissal. Under section 98 of the Employment Rights Act 1996, conduct is a potentially fair reason for dismissal, but employers also need to act reasonably in all the circumstances. Tribunals assess whether the employer carried out a reasonable investigation, formed a genuine belief on reasonable grounds and reached a decision within the range of reasonable responses. Employers are expected to follow the statutory Acas Code of Practice, with compensation adjustments of up to 25 percent where there is unreasonable non-compliance. Clear policies, consistent decision-making and fair process are central to managing risk.

Need Assistance?

DavidsonMorris are experienced employment law specialists offering guidance and support to employers in relation to misconduct at work.

We have extensive experience in helping employers manage disciplinary issues through support with building a robust internal policy, delivering training to HR, management and supervisors on disciplinary procedures and providing guidance on specific misconduct matters.

In some circumstances, it may be appropriate and mutually beneficial to the employer and employee to consider bringing the employment contract to an end with a settlement agreement on terms agreed by both parties. We have extensive experience of leading on settlement negotiations and drafting contractual terms that support your commercial and reputational interests.

If you have a question or need help with misconduct at work, contact us.

Misconduct at Work FAQs

What are examples of misconduct at work?

Examples of misconduct at work include persistent lateness, failure to follow reasonable workplace procedures, refusal to comply with lawful and reasonable management instructions, minor breaches of company policies and inappropriate behaviour towards colleagues. More serious conduct, such as theft, serious dishonesty, violence, harassment or serious breaches of health and safety requirements, may amount to gross misconduct depending on the circumstances.

Can an employee be dismissed for misconduct?

An employee can be dismissed for misconduct where the employer establishes conduct as a potentially fair reason under section 98(2)(b) of the Employment Rights Act 1996 and acts reasonably in all the circumstances under section 98(4). For most employees, ordinary unfair dismissal rights require two years’ continuous service, although automatically unfair dismissal and discrimination claims do not require qualifying service. Minor misconduct will usually attract warnings before dismissal, whereas gross misconduct may justify summary dismissal following a fair process.

What is the difference between misconduct and gross misconduct?

Misconduct refers to behaviour that falls below expected standards but does not ordinarily justify dismissal without prior warnings. Gross misconduct is conduct so serious that it amounts to a fundamental breach of contract and may justify dismissal without notice. The classification depends on the facts, the employee’s role, the employer’s disciplinary policy and whether the conduct is incompatible with continued employment.

Does an employer always have to suspend an employee accused of misconduct?

No. Suspension is not automatic and should only be used where it is reasonable and proportionate, for example where there is a risk to colleagues, clients, evidence or the integrity of the investigation. Suspension is usually on full pay and should be kept under review. Unreasonable or unnecessary suspension may give rise to constructive dismissal risk.

What happens if an employer does not follow the Acas Code?

If an employer unreasonably fails to follow the statutory Acas Code of Practice on Disciplinary and Grievance Procedures, a tribunal may increase compensation by up to 25 percent under section 207A of the Trade Union and Labour Relations (Consolidation) Act 1992. Failure to follow the Code may also undermine the fairness of a dismissal under section 98 of the Employment Rights Act 1996.

Can misconduct overlap with discrimination or whistleblowing?

Yes. Allegations of misconduct may arise in situations where an employee has raised a grievance, made a protected disclosure or is connected to a protected characteristic under the Equality Act 2010. In such cases, employers should assess carefully whether disciplinary action is objectively justified and free from discriminatory or retaliatory motive, as these claims do not require qualifying service and carry significant liability risk.

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