Lakshmi v Mid Cheshire Hospitals NHS Trust

Tribunals usually decide if a disciplinary policy has contractual status by looking at whether it has been expressly incorporated into someone’s contact. In Lakshmi v Mid Cheshire Hospitals NHS Trust (2008, IRLR 956), the High Court held that, although the language used in the policy was not contractual in nature, the implied term to act in good faith required the employers to comply with it unless they could show they had a good reason not to.

Basic facts

Dr Lakshmi, a consultant physician at the hospital, was responsible for signing statutory cremation certificates. This was supposed to involve visually examining the body and discussing the death with the doctor who had treated the deceased.

However, in August 2006 the Trust found out that she had signed 46 forms without seeing the body and, sometimes, without discussing the death with the treating doctor. This was a criminal offence as well as professional misconduct.

The Trust started an investigation in October which it then put on hold in November when the police became involved. Their investigation continued until May 2007 when they passed their file of papers to the Crown Prosecution Service, telling Dr Lakshmi she would be told the outcome shortly.

However, as the Trust was concerned at the delay that had already occurred, it decided to restart its own internal disciplinary process in June 2007, despite police objections. It was also contrary to the Trust’s own disciplinary policy which said it should only proceed in such circumstances if it confined itself to aspects of the case not related to the police investigation.

Following an interview in August at which she refused to answer questions, Dr Lakshmi was asked to attend a disciplinary hearing in November at which she again refused to answer questions and was summarily dismissed.

Arguments by the parties

Dr Lakshmi sought a declaration that the hearing and her dismissal had no effect because the terms of the disciplinary procedure were incorporated into her contract. As such, the decision to go ahead with the hearing had been a breach of contract.

She also argued that even if the provisions of the procedure were not expressly incorporated, they still amounted to guidance that the Trust should have adhered to, unless it had a good reason not to. The Trust had therefore breached the implied term of mutual trust and confidence that it owed her by its failure to adhere to the guidance.

For its part, the Trust argued that the policy was not incorporated and it just had to have “due regard” to it. In any event, as Dr Lakshmi had been in breach of her own contract, the Trust said it was entitled to act contrary to its disciplinary policy.

High Court decision

The Court decided that although the policy was not incorporated into Dr Lakshmi’s contract (as the language used was not contractual in nature), there was an implied term (from the duty to act in good faith) that the Trust would comply with the policy unless it had a good reason not to.

In this case, although Dr Lakshmi was guilty of gross misconduct, that did not mean the Trust did not have to comply with the provisions of its disciplinary process fairly.

It awarded her damages equivalent to one month’s net pay reflecting the likely period that the disciplinary hearing would have been postponed, had her employers adhered to their disciplinary policy.


It is worth noting that the judgement also commented that, irrespective of any terms in a disciplinary policy, in the absence of good reason to do so, refusing to agree to adjourn a disciplinary hearing would be a breach of the implied term of “good faith” (trust and confidence).