Welcome back to this week’s edition of case law. With it being Mother’s Day and World Women’s Day this week it would have been wonderful to have an inspiring case about sex discrimination. Unfortunately, no such cases have been decided recently so instead here’s a case about money laundering, constructive dismissal and gross misconduct.

Today’s questions:

Does a successful dismissal appeal clear an employee’s record of any previous misconduct?

Can an unfair (constructive) dismissal arising from a demotion following disciplinary proceedings be fair?

Mr Wells, the Claimant, was an estate agent at Countrywide Estate Agents, the Respondent, for over 20 years. In his original contract, dated 1983, the only disciplinary sanctions were verbal and written warnings and dismissal. However, the company handbook (which was non-contractual) included demotion, suspension without pay and transfer to a different office as well as the former sanctions.

The Claimant became manager of his branch and received training on money laundering compliance, a key issue in the Respondent’s industry. The Claimant’s branch was not performing well and a meeting was scheduled with the Respondent. During the meeting he inexplicably stated that compliance to money laundering regulations was not important, this was a complete own goal and the Respondent began investigating compliance.

Disciplinary proceedings ensued and the Claimant accepted that he had not complied with money laundering regulations and this was partly responsible for the branch’s poor performance. The Respondent dismissed the Claimant for gross misconducted.


The Claimant believed this was a harsh decision and appealed stating that he would have expected to be demoted, not dismissed. The Respondent, taking his length of service into account, agreed and reinstated the Claimant but in a less senior position.

The Claimant was aghast with the decision to demote him, stating that he felt the Respondent was not entitled to do this and was treating him as if he was guilty of gross misconduct (he was). He also mentioned that the Respondent had not apologised for dismissing him.

The Claimant resigned and began Tribunal proceedings for unfair constructive dismissal. The ET rejected the claim stating that a demotion in this scenario didn’t amount to a fundamental breach of contract. It also ruled that the decision to dismiss would have been fair.


The Claimant appealed but the EAT rejected the appeal. It held that the Claimant’s previous gross misconduct and fair dismissal did not disappear just because his reinstatement was successful. It also ruled that if faced with the choice of demotion or dismissal then the Respondent had taken the lesser sanction, this meant the dismissal, whether constructive or otherwise, was fair.

Today’s lessons:

No, just because a gross misconduct dismissal has been successfully appealed that does not wipe the slate clean. In this case the employer was right not to trust the employee handling money laundering compliance following his previous blasé attitude. Furthermore he had still committed gross misconduct but his length of service had been used as a mitigating reason not to dismiss. It is rare but gross misconduct does not always result in dismissal.

In these circumstances yes, a constructive dismissal can be fair, although in this case the ET didn’t decide whether the employee was constructively dismissed at all as whatever way he was dismissed it was fair. In this case it also worth noting that demotion was suggested by the employee.

The lesson for employees is, when you are performing poorly and committing blatant gross misconduct, don’t complain when you aren’t dismissed!