My wife was wrongly accused of fraud by a colleague at work

My wife was wrongly accused of fraud by a colleague at work and reported her to police. The police investigated fully and the CPS decided there was no case to answer. The colleague is not happy and has pressed the employer to investigate for evidence of misconduct. The employer intends to get the witness statements from the police and review them internally to decide if there is any misconduct that can be pinned on her. Is it lawful for the police to release statements made under caution in an investigation which resulted in no charges or any other action to an employer without the employees permission. For clarity - the employer is the MoD; the Police Force is the MoD Police - but the interview and investiogation was carried out under PACE etyc - so the MoD POlice are just a police force in this context
JA: Where is your wife? It matters because laws vary by location.
Customer: England
JA: What steps has your wife taken so far?
Customer: She has told the employer she does not give consent for the MoD Police to share witness statements with the MoD for the purposes of internal disciplinary procedures. The employer has said the MoD Police is part of the MoD and they can do what they like.
JA: Is there anything else the Lawyer should know before I connect you? Rest assured that they'll be able to help you.
Customer: The deciding officer in the internal investigation seeking evidence of misconduct following the Police taking no action is the head of the team which made the false allegation.