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Dismissal: Employer “White Lie” was a Breach of Contract

In a recent case, the Employment Appeal Tribunal (EAT) confirmed that in a dismissal situation, if an employer opts to give a reason for dismissal, they have a duty not to mislead the employee in line with the implied contractual duty of mutual trust and confidence.

Background

The implied duty of mutual trust and confidence prevents an employer or employee from acting in a way which is likely to result in destroying or seriously damaging the relationship of trust and confidence between the parties.

The case of Rawlinson v Brightside Group Ltd involved a Group Legal Counsel who was dismissed in May 2015 from his role. In the lead up to his dismissal, a new CEO at Brightside Group Ltd had identified concerns about Rawlinson’s performance and capabilities but failed to raise this with him. It was decided that Rawlinson was to be dismissed, but that to soften the blow, he was to be told that this was as a consequence of a business restructure and not because of any performance issues.

During Rawlinson’s dismissal, he was told that following a review of their legal services, the business had decided that the current arrangements were not working and they had decided to change reporting lines and use more external legal support. He was to be given his 3 months contractual notice. Rawlinson took the view that if Brightside were to outsource its legal services then this would mean his role should be transferred to the external legal advisors under the TUPE regulations. When he put this to them, Brightside refused to tell Rawlinson who the services were being outsourced to and Rawlinson, considering this was a breach of contract by his employer, resigned without working his notice.

Rawlinson brought various claims in the Employment Tribunal, including a claim for constructive wrongful dismissal alleging that he had been forced to resign due to a breach of contract on the part of his employer. The Employment Tribunal dismissed his claim, confirming that nothing in the way that Brightside had acted amounted to a breach of contract and that they had not been obliged to give Rawlinson a reason for the dismissal or to give him feedback about his work performance.

Mr Rawlinson appealed to the EAT.

Decision

The EAT allowed the appeal and rejected the earlier Employment Tribunal’s decision. The EAT confirmed that the implied duty of trust and confidence obligates an employer not to deliberately mislead an employee. This does not mean that there is a wider obligation to volunteer information but that when a choice is made to do so, any information should be provided in good faith. In this case, the employer’s “white lie” resulted in a breach of the implied duty of trust and confidence, and therefore a breach of contract.

The EAT accepted that Rawlinson had not left because of the lie and had in fact left because of a false reason given for his dismissal, but confirmed that this was not fatal and that he could still rely on the conduct of his former employer as the reason for his resignation.

Comment

The employer got itself in hot water in this case by not being upfront about the genuine reason for the employee’s dismissal. Although this was partly to make it easier on the employee, there were consequences to this. In this case, the Claimant had less than 2 years’ service and although the employer was not obligated to give a reason for dismissal, once they decided to do this, the implied duty of trust and confidence required them not to mislead.  

This bulletin is for general guidance purposes only and should not be used for any other purpose.

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