Is it a breach of trust and confidence to mislead an employee about the reason for their dismissal?

In the case of Rawlinson v Brightside Group Ltd, the Employment Appeal Tribunal looked at whether an employee was entitled to receive damages for his notice period after he resigned in these circumstances.

Background

Mr Rawlinson was employed as Legal Counsel. Shortly after he started his employment, the Company began to have concerns about his capabilities. A few months later, after a review period, the Company decided it was going to dismiss Mr Rawlinson because of his poor performance. The Company had told him that certain areas needed to be addressed, but it had not given him any detail of the poor performance concerns.

The Company decided it wanted to “soften the blow” for Mr Rawlinson so, rather than tell him he was being dismissed for poor performance, he was told that the Company had reviewed its legal services provision, and had decided to reorganise that part of its business and rely on more external legal advice. Mr Rawlinson was told that, as a result, his services were no longer required, and he was given 3-months’ notice.

Mr Rawlinson’s view was that if the Company was effectively outsourcing its legal services, this would be a TUPE transfer situation. He asked his manager who the services were being outsourced to, but his manager declined to comment. Mr Rawlinson then resigned with immediate effect, claiming the Company had not consulted with him about what he believed to be a TUPE transfer, and the Company had acted in breach of “mutual trust and confidence”, which is a term implied into all contracts of employment. Mr Rawlinson had not been with the Company for 2 years, so he was not able to bring an unfair dismissal claim, however he brought a claim for breach of contract, for the balance of his notice pay.

The Employment Tribunal (ET) rejected Mr Rawlinson’s claim, finding that the Company had not breached mutual trust and confidence. Mr Rawlinson appealed to the Employment Appeal Tribunal (EAT). The EAT disagreed with the ET, and allowed Mr Rawlinson’s appeal.

The EAT decided that the implied term of mutual trust and confidence included a duty on an employer not to deliberately mislead an employee. The EAT’s view was that the Company had misled Mr Rawlinson about the real reason for dismissal, and even though the intention had been to “soften the blow” for him, this was still a breach of contract in the circumstances. The EAT said this did not mean employers are always going to be under a duty to volunteer all information to their employees, but where an employer chooses to give information, it may be a breach of trust and confidence to mislead. The EAT said there might be cases where it is not inappropriate to tell a ‘white lie which serves some benign purpose’, but on the facts of Mr Rawlinson’s case, the Company had done more than just tell a “white lie”. The outcome was that Mr Rawlinson was entitled to receive the balance of his notice pay.

What should employers take away from this case?

  • Where an employer proposes not to be completely upfront with an employee about why they are being dismissed, it should exercise caution. In Mr Rawlinson’s case, despite the Company’s original intention being to soften the blow for him, this backfired. Although it is quite common for an employer to want to deal with a dismissal in a way that makes it easier news for the employee to handle, employers need to make sure they are not crossing the line. 
  • Whilst an employer is not obliged to give reasons for dismissal (save where an employee with at least 2 years’ service makes a request for a written statement giving reasons for dismissal), if an employer does choose to give a reason, it is risky to deliberately mislead; being honest and upfront is the best policy. 
  • If an employer gives misleading reasons for dismissal, it is possible an employee could find out about it if they make a subject access request for their personal data under the Data Protection Act. 
  • Where an employee resigns in response to a breach of contract by their employer, this is likely to mean the employer is not then able to rely on any post-termination restrictive covenants in the employee’s contract of employment.
JR BW July 2017

Jonathan Royle

Senior Associate