Mr Knowles was employed as an energy purchasing manager with Kent County Council. In January 2011, the Council received information from the police that he had been acting fraudulently in the course of his work for the Council and had been misappropriating money.
Mr Knowles was arrested at work on 5 January 2011 but was not remanded in custody. On the same day, the Council wrote to him suspending him, without pay. On 19 May 2011, the Council held a disciplinary hearing where it decided to dismiss Mr Knowles, concluding as it did that he had, in effect, diverted over £200 million into an account which appeared to be in his name or available to him.
Mr Knowles brought claims alleging, amongst other things, that he ought to have been paid during the period of his suspension. The Council sought to rely on the relevant contractual provision, which read as follows: “Suspension must be for a fixed period of time, with regular formal review, and confirmed in writing to the employee who will retain the pay he would have received if at work during the period of suspension”.
The Council argued firstly that it was entitled under that wording to withhold pay, and then repay it to Mr Knowles if the misconduct allegation against him was not established. The Employment Appeal Tribunal (“the EAT”) rejected that argument. It said the meaning of those words was clear, namely that a suspended employee retains the right to the pay he would have received if he had been working during the period of his suspension.
The Council also argued that Mr Knowles had in effect put himself in a position, by being arrested and suspended on suspicion of serious fraud, such that no pay was properly payable. The EAT was not impressed with that argument either. It said that argument would entitle every employer to unilaterally decide that no pay should be forthcoming on suspension. The EAT accepted that if an employee is remanded in custody, then it can be the case that he has acted in such a way to render it impossible for him to work (and thus pay can be withheld); but Mr Knowles had not been remanded in custody. The Council therefore had to pay Mr Knowles for the period of his suspension.
The Council was clearly unimpressed that it had to pay Mr Knowles during his suspension on suspicion of serious fraud. This is entirely understandable given it dealt in public funds. The Council’s suspicions were indeed justified when Mr Knowles was jailed for seven years this month. However the Council’s documents were not up to scratch. The very clear message is that if an employer wants to be able to suspend an employee on no pay, then it needs to have an express contractual power to do so. Without such a power, the employer will be in breach of contract, even in the case of serious fraud by the employee.