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False dismissal reason is breach of trust and confidence
Rawlinson v Brightside Group Ltd
The implied term of trust and confidence may be breached if an employer misleads an employee about the reason for their dismissal.
Mr Rawlinson worked as in-house legal counsel for Brightside. The employer had concerns about his performance and, instead of going through a performance management process, decided to dismiss him five months after he had joined. To ‘soften the blow’, it chose to tell him that it would be outsourcing legal services and that this, rather than the performance concerns (which Mr Rawlinson hadn’t been told about), was the reason for his dismissal. Brightside also wanted to have him work his three-month notice period to allow time to organise his replacement and for an orderly hand-over.
When Brightside refused to comment on who the legal services were being outsourced to Mr Rawlinson considered they were acting in breach of the implied term of trust and confidence and immediately resigned in response to that breach. The real reason for his termination (performance) became apparent to him after submitting a subject access request. Mr Rawlinson brought a claim for constructive wrongful dismissal for notice pay (as he didn’t have the qualifying service to bring an unfair dismissal claim) and for a failure to inform and consult under TUPE.
A tribunal dismissed his TUPE claim (but this isn’t the interesting bit of this case) and his wrongful dismissal claim - on the basis that his complaint related to the manner of his dismissal and, under established case law, it isn’t possible to receive damages for breach of contract in respect of unfair treatment connected to a dismissal. Mr Rawlinson appealed.
The EAT overturned the tribunal’s finding that there was no wrongful dismissal and awarded Mr Rawlinson his notice pay.
The EAT held that Mr Rawlinson’s complaint did not relate to the dismissal itself, but rather to the information that Brightside gave him in the hope he would work his notice period. Although he resigned believing the implied term of trust and confidence was breached for a different reason (failure to inform and consult under TUPE), that did not matter. Brightside was in breach of contract at the time entitling Mr Rawlinson to rely on that breach.
In all but the most unusual cases, the implied term of trust and confidence means an employer must not deliberately mislead, even if the motivation for doing so is to ‘soften the blow’. This doesn’t constitute a broader obligation to volunteer information, but where a reason for termination is given, it must be done in good faith. The EAT did acknowledge that there may be instances in which the operation of the implied term would permit an element of deceit (‘the white lie that serves some more benign purpose’) but this was not present in this case.
Link to judgment: http://www.bailii.org/uk/cases/UKEAT/2017/0142_17_2111.html
Some HR take outs from this decision:
- Honesty is always the best policy!
- It’s a useful reminder of the differences between wrongful and unfair dismissal claims, some of which are as follows:
- No length of service requirement for wrongful dismissal claim; it’s two years for unfair dismissal
- Damages for wrongful dismissal are limited to the notice period and/or the time it would have taken to complete a relevant contractual procedure (if one exists). Unfair dismissal claims attract compensatory awards subject to the statutory cap
- For unfair dismissal, it is only what the employer knew at the time of dismissal that can be considered. For wrongful dismissal, the employer or employee can also rely on facts that only came to light after the dismissal
- Where an employee doesn’t have the length of service necessary to bring a claim for unfair dismissal, they may still have contractual claims arising out of what might be called ‘unfair’ treatment during the dismissal process.
- Giving a false reason for termination could release an employee from their post-termination obligations.