What to do if an Employee is Imprisoned?

termination of employment in the event of a custodial sentence

Sometimes the unthinkable happens. For many employers, being told that one of your employees has been convicted of a crime and facing time in prison is one of those moments. It may be time to consider termination of employment in the event of a custodial sentence.

Termination of employment in the event of a custodial sentence

Gross misconduct – behaviour so serious that it is grounds to terminate a contract of employment – can justify dismissal without notice.  But even in the most serious cases, employers must follow a fair and reasonable procedure before the dismissal.

Employers all over the UK were stunned when a dismissed chef was recently awarded £11,000 compensation even though he was imprisoned for grievous bodily harm including breaking the arm of a police officer, biting another and spitting blood over witnesses.

While he was in jail, his employer sacked him. However, they didn’t follow any dismissal procedure, didn’t investigate what had happened, couldn’t demonstrate that they had notified him of their decision, nor offered him any right to appeal.  On the face of it, their decision to dismiss seems hard to criticise – but the manner in which they reached that decision could be.

The tribunal ruled that ‘it was persuaded that the complete absence of a disciplinary process with no right of appeal did not fall within the band of reasonable responses open to an employer in justifying the fairness of a summary dismissal on the grounds of gross misconduct for a first disciplinary offence.’

Events leading to termination of employment in the event of a custodial sentence will hopefully not arise too often, but a business must react promptly and understand what you can do within the limits of the law. Before taking any action, it must be considered:

  • the nature of the offence committed
  • the duration of the sentence
  • the type of role performed by the employee
  • the impact the conviction has on the organisation and its reputation
  • the employee’s previous track record and employment history.

This is not a full list of factors, but generally, these need to be considered in relation to the employees’ conviction and whether their employment can be sustained by the business.

‘Frustration’ of employment contracts

If an employee gets a long custodial sentence, an employer may argue that the employee’s employment contract has been ‘frustrated’. This means that an unforeseen circumstance makes it impossible for the parties to fulfil the terms of the contract. As such, the employment relationship between the employer and employee is automatically terminated. As this type of termination is not considered a dismissal, the employee cannot bring a claim for unfair dismissal.

Employment Tribunals do not always look too kindly on employers who have decided to terminate the employment contract in this way. It is generally advised to take the disciplinary action or dismissal route.


If an employee is sent to prison, termination of employment in the event of a custodial sentence may be deemed fair. A dismissal will be considered legally fair when an employer can show that the reason for the dismissal was:

  • related to an employee’s conduct
  • related to the employee’s capability or qualification for the role
  • redundancy
  • a statutory restriction that prevents the employment continuing
  • some other substantial reason that justifies this action.

The fact that your employee has been sent to prison could come under ‘some other substantial reason’. On this basis, if the employee has been handed a long prison sentence, it may be fair for the employer to dismiss on the basis that the employee will be unable to perform the duties set out in their contract of employment.

Alternatively, it may be fair for you to dismiss the employee because of their conduct. For example, an employee’s role may involve handling money and having access to the employer’s bank account. If they have committed a crime such as fraud or theft, then no one would reasonably expect they could continue in that role for you.

Importance of fair procedures

Failing to follow a fair procedure is where it can all go all wrong for employers. Before you decide whether dismissal is the best course of action, you must consider all the facts and, if possible, try to get the employee’s views.

A case from early 2016 serves as a warning to employers. An employee had worked for his employer for several years. He was sentenced to six months in prison for dangerous driving and released from prison after just two months. Upon returning to work, he was given a ‘termination of employment in the event of a custodial sentence’ letter terminating his employment on the basis that his employment contract had been frustrated. The employee contested this and the Employment Appeal Tribunal (EAT) made it clear that the employer had not followed correct procedures. The employer had got it wrong in sending out a dismissal letter without conducting any form of investigation. The EAT also stated that the employer could not rely on frustration because when they gave the employee the letter, the employee was already out of prison and he could return to work and fulfil the contract.

If we can help you with this or any other HR issue, please do not hesitate to contact a member of our HR Team at HR Services Scotland Ltd on 0800 652 2610.