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29 May 2015

Criminal test for dishonesty does not apply in alleged misconduct cases

Mrs Gondalia had been a cashier at Tesco for 16 years. Tesco operates a policy whereby if a customer is charged full price for a product that is marked at a discount, they will refund double the amount that has been overcharged. Gondalia noticed that customers were being charged full price for Easter eggs that were marked at a discount. She finished her shift and on two occasions purchased a number of Easter eggs at full price and then took them to Customer Services to claim double the difference. She did not hide what she was doing and made it clear that she knew the eggs were wrongly marked but was still given the double the difference refund of £18. Following an investigation and disciplinary proceedings, Mrs Gondalia was dismissed for gross misconduct.

The employment tribunal rejected Mrs Gondalia’s claim for unfair dismissal.  They found that Tesco held a genuine belief that Mrs Gondalia had committed the misconduct and that it had reasonable grounds to do so for the simple reason that Mrs Gondalia accepted what she had done, although she did not think she had done anything wrong.  Mrs Gondalia’s actions fell within the definition of gross misconduct, as set out in Tesco’s employee handbook and it was important for an employer to have trust in its employees, particularly when it comes to money.

Mrs Gondalia appealed to the EAT.  She argued that, as her honesty was at issue, the tribunal should have considered the leading criminal case of R v Ghosh when determining whether the conduct was dishonest or not and should have asked: i) was the conduct 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 found that the omission of any reference to R v Ghosh by the tribunal was not an error of law and questioned how useful it could be to apply a criminal case to an employment context.  The EAT stated that the question, to be asked under section 98(4) of the Employment Rights Act 1996, is whether the employer acted reasonably or unreasonably in treating the dishonesty as a sufficient reason for dismissing the employee.

However, the EAT upheld Mrs Gondalia’s appeal, finding the tribunal’s decision of a fair dismissal to be inadequately reasoned and the case was remitted to a fresh tribunal for a rehearing.


The case makes it clear that section 98(4) of the Employment Rights Act 1996 remains the starting point for tribunals when considering any allegation of dishonesty and the criminal law test for dishonesty does not apply.  However, as the allegation against Mrs Gondalia was not expressly one of dishonesty, this area may require further clarification in the future.

Contact us

To find out how Steeles Law Employment team can support you and your business, please do not hesitate to call 01603 598000 or email employment@steeleslaw.co.uk. Appointments are available at our Diss, Norwich and London offices or at your offices by appointment.

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