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Varma v North Cheshire Hospital NHS Trust

In some professions, employers can discipline employees for either professional or personal misconduct. In Varma v North Cheshire Hospital NHS Trust, the Employment Appeal Tribunal (EAT) said that, where there is an overlap, employers must choose the professional misconduct route (as it gives employees more safeguards) although it will not necessarily be a fundamental breach of contract if they don’t.

Basic facts

Dr Varma joined the Trust as a trainee doctor in July 2001 on a year’s contract. After a few months the Trust began to have concerns about his mental health and in March 2002 he took an overdose.

He was told that he was fit to return to work in May but the Trust refused because of continuing concerns about his mental health. At a meeting at the end of October, the medical director (Dr Rose) recommended that Dr Varma’s fitness to practice should be assessed by an outside body.

In November 2002 a letter was circulated to Trust employees which seemed to have come from Dr Varma and which resulted in his suspension for personal misconduct. In December Dr Rose referred him to the General Medical Council (GMC) but did not tell him until April 2004.

Dr Varma’s disciplinary hearing was finally scheduled for May 2003, but he resigned just before it took place because he believed, from documents he had seen, that it would not be fair. He claimed constructive unfair dismissal as a result of a fundamental breach of the implied term of trust and confidence.

Tribunal decision

The tribunal said that, although the Trust had treated Dr Varma badly in certain respects, it did not consider that it was guilty of a fundamental breach of trust and confidence.

Instead it concluded that Dr Varma had resigned because he became aware (as a result of the documents he had seen) that he was held in very low esteem by a number of colleagues, and that he had decided not to attend the disciplinary hearing because he knew he was likely to be dismissed.

Dr Varma appealed. He argued, among other things, that his employer was guilty of a fundamental breach of trust because, when there is an overlap between professional and personal misconduct (as in this case), employers should chose the professional misconduct route as it provides employees with more safeguards.

EAT decision

The EAT agreed with the broad thrust of the tribunal’s decision, saying that it had dealt thoroughly but succinctly with Dr Varma’s allegations of fundamental breach of contract.

It also agreed that when there is an overlap between professional and personal misconduct, employers must choose the professional misconduct procedure as this provides greater safeguards to the employee.

However, it was incorrect to say that “the choice of the wrong procedure per se created a fundamental breach and hence repudiation of contract which the employee could accept.” Otherwise, the choice of the wrong procedure “would be fatal in any case even though the employer had the gravest possible grounds to dismiss and yet had made a mistaken but genuine incorrect choice in the type of procedure.”

It concluded that, in this case, there was no evidence to suggest a fundamental breach in the Trust’s choice of procedure. Nor was there anything to show that Dr Varma had challenged the procedure and was then denied the alternative route. Even if he had challenged it, the EAT took the view that the fact that the procedure could be challenged meant it could not be a fundamental breach.

It concluded that, given the particular facts of this case, there was no breach because “the Trust was acting upon legal advice, there were many allegations of personal misconduct, the choice of which procedure was accordingly a difficult one, and the right to challenge that choice of procedure existed”.