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Published 17 March 2015
Mr Shrestha worked as a floating support worker for Genesis Housing Association Limited (Genesis). Mr Shrestha used his own car to travel to see clients at their homes and was entitled to claim expenses for the mileage travelled. An audit of Mr Shrestha's mileage claims for a three-month period in 2011 showed that he had claimed an unusually high mileage: the mileage claimed was consistently nearly twice as far as the distances calculated by the AA route-finder.
Genesis began a disciplinary procedure against Mr Shrestha, alleging that he had fraudulently over-claimed mileage expenses. An investigation into the allegations was carried out by Miss Duffy, an area manager at Genesis. The distances claimed by Mr Shrestha against the same journeys in the previous year had significantly increased. The RAC website gave similar distances to the AA.
A disciplinary hearing was held and chaired by Mr East. Mr Shrestha gave Mr East several explanations for the mileage discrepancies: difficulty in parking, one-way road systems, and road works causing closures or diversions. Mr East questioned Mr Shrestha regarding two of the journeys in question. He considered that it was not necessary to go through each and every journey with Mr Shrestha because every journey was above the mileage suggested by both the AA and the RAC. Mr East did not therefore think that it was plausible that there was a legitimate explanation for each and every extended journey. Mr Shrestha was summarily dismissed for gross misconduct. He appealed against his dismissal but it was not upheld. The appeal panel could find no viable explanation for why every journey examined in the investigation was considerably higher than the mileage estimated by the AA and RAC.
Mr Shrestha unsuccessfully brought claims for unfair and wrongful dismissal in the employment tribunal. The tribunal held that Genesis had carried out a reasonable investigation and both Mr East and the appeal panel had a reasonable belief that Mr Shrestha had claimed for mileage he had not driven. With regard to the extent of the investigation, the tribunal considered it was reasonable in the circumstances for Mr East not to question Mr Shestha regarding each and every journey in question. It disagreed with Mr Shrestha's argument that Mr East should have attempted to recreate each journey to investigate his claims that road works and parking problems increased his mileage. It accepted that it was not possible for Mr East to do so, as the circumstances on the day of travel could not be replicated.
Following an unsuccessful appeal to the EAT, Mr Shrestha appealed to the Court of Appeal. He argued that the tribunal should have considered the reasonableness of what Genesis failed to do, as well as the reasonableness of what it did do. In order to pass the reasonableness threshold, an employer was obliged to investigate each possible line of defence raised by an employee, but Genesis had not done so.
The Court of Appeal unanimously dismissed the appeal. The tribunal was entitled to find that the employer had carried out a reasonable investigation in the circumstances. It was not necessary for an employer to extensively investigate each line of defence advanced by an employee. This would be too narrow an approach. What was important was the reasonableness of the investigation as a whole.
The Court of Appeal have emphasised that an employer only has to carry out a reasonable investigation; it does not have to do everything possible to investigate every possible explanation put forward by an employee. While the extent of an investigation will always be case specific, it is helpful that the Court of Appeal have identified that in some cases it will be misleading to talk in terms of distinct lines of defence. This should assist employers in reducing the time spent on, and also the scope of, investigations and disciplinary hearings.
Shrestha v Genesis Housing Association Ltd  EWCA Civ 94
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