Reaffirming Employment Contract Protections: Salary Entitlement and Implied Trust in North West Anglia NHS v. Gregg

Introduction

North West Anglia NHS Foundation Trust v. Gregg ([2019] EWCA Civ 387) is a pivotal case heard by the England and Wales Court of Appeal (Civil Division) on March 19, 2019. The appellant, North West Anglia NHS Foundation Trust ("the Trust"), challenged a High Court Judge's decision regarding contractual breaches involving Dr. Gregg, a medical practitioner employed by the Trust. The primary issues revolved around the Trust's actions during Dr. Gregg's interim suspension following serious allegations related to patient deaths under his care.

Summary of the Judgment

The Court of Appeal upheld the High Court Judge’s decision on certain grounds while overturning it on others. Specifically:

• Issue 1: Salary During Interim Suspension — The Court dismissed the Trust's appeal, affirming that the Trust was not entitled to withhold Dr. Gregg's salary during his interim, non-terminatory suspension.
• Issue 2: Termination of Employment on Alternative Grounds — The Court allowed the appeal, stating that the High Court Judge erred in determining that holding a termination hearing based on registration failure was unfair to Dr. Gregg.
• Issue 3: Parallel Disciplinary Process — The Court also allowed the appeal, concluding that the High Court Judge incorrectly found the Trust in breach of the implied term of trust and confidence by proceeding with internal disciplinary actions concurrently with a police investigation.

Analysis

Precedents Cited

The judgment extensively referenced several key cases that influenced the Court's decision:

• Wallwork v Fielding & Others [1922] 2 KB 66 — Established that lawful suspension of employment typically suspends payment, emphasizing the mutual suspension of contractual obligations.
• Miles v Wakefield Metropolitan District Council [1987] 1 AC 539 — Introduced the "ready, willing, and able" test for wage entitlement during suspension.
• Malik v BCCI [1998] AC 20 and Gogay v Hertfordshire County Council [2000] IRLR 703 — Defined the implied term of mutual trust and confidence in employment contracts.
• Lakshmi v Mid Cheshire Hospitals NHS Trust [2008] EWHC 878 (QB) — Addressed the employer's obligation to follow contractual disciplinary processes without circumventing them.
• Chhabra v West London Mental Health NHS Trust [2013] UKSC 80 and Al-Mishlab v Milton Keynes Hospital NHS Foundation Trust [2015] EWHC 3096 (QB) — Provided guidance on the granting of injunctions to prevent unfair disciplinary proceedings.

Legal Reasoning

The Court meticulously dissected each issue:

Issue 1: Entitlement to Deduct Pay

The Court concluded that the Trust lacked both express and implied contractual terms permitting salary deductions during an interim, non-terminatory suspension. Key points include:

• Contractual Terms: Clause 12 explicitly prohibited deductions from salary without written consent, and no other contractual provisions allowed such deductions.
• MHPS and Disciplinary Policy: Both documents indicated that suspensions/exclusions should typically be on full pay, reinforcing the unlikelihood of pay deductions.
• Common Law Principles: The "ready, willing, and able" test was applied, determining that Dr. Gregg was indeed prepared to work, and his inability was involuntary due to the IOT's suspension order.

Issue 2: Termination of Employment on Different Grounds

The High Court Judge incorrectly equated the implied term of trust and confidence with a general duty to act fairly, thereby deeming the Trust's proposed termination hearing unfair. The Court of Appeal corrected this by:

• Clarifying that the Trust was within its contractual rights to pursue termination based on alternative grounds without being bound to follow the disciplinary process originally engaged for misconduct allegations.
• Highlighting that the Judge failed to consider whether the Trust had reasonable and proper cause to terminate based on registration failures independently of the disciplinary process.

Issue 3: Postponement of Internal Disciplinary Process

The Court assessed whether the Trust breached the implied term of trust and confidence by continuing internal disciplinary proceedings alongside ongoing police investigations. It concluded:

• The High Court Judge improperly applied the implied term by assuming that proceeding with internal investigations would inherently damage the trust relationship.
• There was no substantial evidence to suggest that the Trust's actions were calculated to seriously damage the relationship or that there was a real danger of a miscarriage of justice in criminal proceedings.
• The Trust acted within its discretion to manage its disciplinary processes without being unduly influenced by external criminal investigations.

Impact

This judgment reinforces the sanctity of employment contracts within the NHS and similar settings, particularly concerning salary entitlements during interim suspensions. It also clarifies the boundaries of implied contractual terms, especially the distinction between mutual trust and confidence versus a general duty to act fairly. The decision provides clearer guidance on managing parallel disciplinary and criminal proceedings, emphasizing that employers can proceed with internal investigations without waiting for external legal processes to conclude, provided there is no substantial risk of injustice.

Complex Concepts Simplified

Implied Term of Trust and Confidence

An implied term of trust and confidence in an employment contract means that both employer and employee are expected to act in a way that does not damage the relationship of trust. This term is not explicitly written but is assumed to be part of every employment contract.

Interim Suspension

An interim suspension is a temporary removal from duties that does not terminate employment. It is typically imposed pending further investigation into allegations against the employee.

"Ready, Willing, and Able" Test

This legal principle assesses whether an employee is entitled to wages during a suspension by determining if they were prepared and available to work. If the employee was willing and able but prevented by external factors, wage deductions may be unlawful.

Wednesbury Rationality Test

A standard used by courts to determine whether a decision made by a public authority is so unreasonable that no reasonable authority would ever consider imposing it. It assesses both the process and the outcome of decisions.

Conclusion

The North West Anglia NHS Foundation Trust v. Gregg case underscores the importance of adhering to contractually stipulated terms regarding employment suspensions and reinforces the protection of employee salaries during interim non-terminatory suspensions. Additionally, it clarifies the scope of the implied term of mutual trust and confidence, differentiating it from a general duty to act fairly. The Court of Appeal's decision serves as a crucial reference for future employment disputes within the NHS and similar institutions, ensuring that disciplinary actions are conducted within the boundaries of established contractual and legal frameworks.