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Misleading an Employee Could be Grounds for Constructive Dismissal

Where an employer dismisses a particular employee, it is not unknown for employees not to be given the true reason for their employment terminating, whether to spare their feelings or to avoid a claim if the employer considers that the real reason may not be taken well.

However, it would be wise to tread carefully in such situations following a recent decision of the Employment Appeal Tribunal (EAT), which found that giving the employee a false reason for dismissal could amount to a breach of the implied term of trust and confidence, potentially founding a claim of constructive dismissal.

The relevant case is Rawlinson v Brightside Group Ltd. While the case is unusual, it raises an important and potentially significant point which may apply more generally. The case concerned an in-house legal counsel, Mr Rawlinson (R), whom Brightside had decided to dismiss because they were not happy with his performance, although these concerns had never been raised with him. To ‘soften the blow’ of this, R was told he was being dismissed due to a reorganisation which would involve legal services being outsourced. Brightside’s intention was that he would work his three month notice period to ensure a smooth handover to his successor. However, R considered that outsourcing the legal work he did would result in a TUPE transfer of his employment, and asked for further information. This was not provided, because there was, of course, no such outsourcing. This led R to the view that the company were acting in breach of his rights under the TUPE Regulations and he resigned with immediate effect.

Mr Rawlinson brought claims in terms of TUPE – which did not succeed as there was no TUPE transfer - and a claim for wrongful constructive dismissal (being a claim for the breach of contract in relation to his notice pay, as opposed to unfair constructive dismissal, because he did not have the requisite two years’ service to bring this claim) A constructive dismissal claim must be based on a repudiatory breach of contract, and in this case R relied on a breach of the implied term of trust and confidence.

The tribunal in the first instance dismissed this claim. It said that there was no obligation on the company to provide information to the claimant in terms of the ‘real’ reason for his dismissal and the claim was really about the manner in which he had been dismissed. Such cases fall into what is known as the ‘Johnson exclusion zone’ meaning that damages for breach of contract cannot be claimed where the loss arises from unfair treatment leading to a dismissal rather than the dismissal itself. Mr Rawlinson appealed.

The EAT overturned the ET’s decision and found that in most cases, the implied term of trust and confidence must be taken to include an obligation not to deliberately mislead the employee. The EAT noted that this does not mean that an employer must necessarily produce all information to employees voluntarily, but where information is to be provided it should be done in good faith. It did also suggest that there may be cases where there is some element of deceit which is ‘benign’ and which does not amount to a breach of the implied term. In the particular case of Mr Rawlinson, it concluded that there had been a breach of the implied term and noted that the employer was not entirely altruistic in giving the false reason, as it was intended to keep the relationship going for the notice period to ensure a smooth transition and that everything was in order. The EAT also concluded that damages could be awarded.

As noted, this case is unusual but it raises potentially broader points.

Firstly, given the EAT did not consider that there is a duty to provide all information, might it be better to give no reason at all for dismissal? In many cases, the answer to this is likely to be no. Employees given no reason for their dismissal are likely to be dissatisfied and want a further explanation, as well as potentially more likely to take the matter further. There is also the risk that an employee may infer a discriminatory reason if the circumstances are such that this is possible. If it is considered that a particular employee will not take news of their dismissal well, then consideration should be given as to how to deliver this news and how to support them and deal with any subsequent fallout.

A further issue highlighted by this case is that the performance issues had never previously been addressed, which likely played a part in the decision to give a different reason for dismissal in order to protect the employee’s feelings. If the concerns had been appropriately addressed through management there may have been no need to invent the outsourcing scenario which backfired. Failing to address concerns with an employee’s conduct or performance can lead to more difficulty if that is subsequently given as a reason for their dismissal.

Finally, the EAT did not appear to restrict its decision to misleading an employee about the reason for their dismissal. Although it remains to be seen whether this decision will be followed by the EAT or higher courts in future, at the moment if deliberately misleading an employee can be taken to be a breach of the implied term of trust and confidence, arguably there may then be wider scenarios where a potential breach could be envisaged outside of the specific situation in this case. For example, might it be considered a breach to mislead an employee in relation to reasons for refusing a flexible working request or reasons why reasonable adjustments are not possible?

The case of Mr Rawlinson does appear to indicate that if the motive for giving the misleading information is entirely altruistic, or if the deceit involved in benign or relatively trivial, then it may be less likely to give rise to a breach of trust and confidence. However, it does also indicate that such matters will be heavily dependent on the facts of the case. It should be kept in mind that an employee who is given incorrect information may subsequently discover the truth, such as by making a subject access request or through disclosure of information if they make a tribunal claim. In many cases, honesty may well be the best policy.

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