When informing employees that their employment is being terminated, many employers choose to provide the employee with a “kinder” reason rather than the real reason to soften the blow. While this practice may be common place, recent case law shows that in practice honesty may be the best policy, says Katie Mahoney, Associate at Doyle Clayton.
In Rawlinson v Brightside Group Ltd [UKEAT/0142/17/DA], the Employment Appeal Tribunal (“EAT”) had to consider whether Mr Rawlinson, who resigned after his employer gave him a false reason for his dismissal, could succeed in his claim for wrongful constructive dismissal. He did not have two years’ service and so could not bring a claim for unfair dismissal.
Mr Rawlinson was General Counsel (the most senior in house lawyer) for Brightside Group Limited (“Brightside”), an insurance broker. He commenced his employment on 1 December 2014. From the early stages of his employment, Brightside had concerns over his performance but never raised its concerns with him.
After a few months, the CEO decided that Mr Rawlinson’s position was no longer tenable. The business put in place an action plan to end Mr Rawlinson’s employment. It would give him his three months’ notice and require him to work it out so that a handover process could take place.
Brightside decided not to tell Mr Rawlinson the real reason for his dismissal was his performance. Instead, to “soften the blow”, it told him that it would be terminating his employment as a result of a review of its legal services which going forward would involve more use of external law firms.
Mr Rawlinson indicated that if this were the case, his employment would transfer from Brightside to the external firms under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) and asked for more information about when the services were to be outsourced and to which law firms. Brightside declined to comment. Mr Rawlinson claimed that Brightside were acting in breach of contract and as a result he would not be working his notice. He resigned a few days later.
Mr Rawlinson proceeded to bring a number of claims in the employment tribunal. His main claim was for constructive wrongful dismissal, a breach of contract claim for the balance of his notice pay. The Employment Tribunal dismissed this claim. Brightside had not been obliged to give Mr Rawlinson a reason for the termination of his employment and, despite resigning because he believed that TUPE applied (and that in failing to inform and consult with him Brightside were acting in breach of contract), nothing in the way that Brightside had conducted itself amounted to a breach of the implied term of mutual trust and confidence.
Employment Appeal Tribunal
Mr Rawlinson appealed the decision and the EAT upheld his appeal. It ruled that in all but the most rare and unusual cases, the implied duty of trust and confidence imposes an obligation on employers not to deliberately mislead. This does not mean that employers are necessarily placed under an obligation to volunteer information, but where employers have chosen to provide information, the implied duty means that the information must be provided in good faith. In allowing Mr Rawlinson’s appeal, the EAT substituted a finding that his claim should succeed and awarded him damages for his notice period.
The EAT noted that although Mr Rawlinson had not resigned from Brightside because of the lie he had been told (as at the point he resigned, he did not know that the reason he had been given for termination was not accurate), this was not fatal to his case. An employee can rely on matters discovered subsequently in order to justifying his resignation, regardless of his reason for resigning at the time. Mr Rawlinson could therefore rely on Brightside’s lie in order to show a breach of the implied term of trust and confidence entitling him to resign and claim damages for his notice pay.
What does this mean for employers?
Whilst many employers will, on occasion, choose to give a false reason for terminating an employee’s employment, particularly when there are issues of performance involved (to “soften the blow”), this course of action may have unintended consequences. In circumstances where employers are not required to give reasons for dismissal (such as the present case), Brightside would have been in a better position had they given Mr Rawlinson no reason at all for his dismissal.
Mr Rawlinson discovered the real reason his employer was terminating his employment through making a Data Subject Access Request, a tactic often used by employees who are considering bringing claims against their employer. There is therefore a good chance that an employer who gives a false reason will be caught out in this way.
Employees who have two or more years’ continuous service are entitled to ask their employer to provide written reasons for their dismissal and employers must provide reasons within 14 days. Employees dismissed whilst pregnant or on maternity or adoption leave are entitled to written reasons for dismissal without requesting them and irrespective of their length of service.
The written reasons the employer provides can then be used in evidence in any subsequent employment tribunal proceedings and it is therefore important that accurate reasons are provided. If an employer provides a different reason from the real one and the employee discovers this to be the case (whether by making a Data Subject Access Request or through disclosure or witness cross-examination in employment tribunal proceedings), the employee’s dismissal is likely to be found to be unfair.
This case is a cautionary tale reminding employers that they should follow the correct procedures and take an honest approach with employees, if, for no other reason, than it avoids placing them in tricky situations at a later date where they risk being “tripped up” by the earlier reasoning given. This case demonstrates that the motives of the employer are not relevant – even if they are seeking to be “kinder” to the employee and save their feelings, the employer has a duty not to mislead.