Unfair Dismissal - Some Other Substantial Reason Trust And Confidence

Claims for unfair dismissal can sometimes be defended on the basis that the dismissal is fair for “some other substantial reason” i.e. other than the statutory “fair reasons” such as redundancy.

One reason often put forward is a breakdown of the mutual trust and confidence which must exist between an employer and employee. This is an implied term of any contract of employment.

An employee will sometimes claim a breach of this implied term by the employer, and use this to justify resigning and then claiming constructive dismissal. However, the breach must be “fundamental” i.e. so serious that its breach is sufficient to bring the contract to an end Morrow v Safeway Stores Plc [2002] IRLR 9.

In this case the applicant was employed in the supermarket as a bakery production controller. She had had a bad working relationship with the store manager who she felt unreasonably harassed her. He gave her a strong ticking off in front of staff and a customer, saying 'If you cannot do the job I pay you to do, then I will get someone who can'. Two hours later he gave her another telling off. She was extremely distressed at the way she had been spoken to and resigned claiming constructive and unfair dismissal.

The Employment Tribunal said it thought that the public criticism by the store manager was a breach of the implied term of trust and confidence, but that not every breach was a repudiatory breach and what had happened was not serious enough as to entitle her to resign and claim constructive dismissal. The EAT said this was wrong and that 'In general terms, a finding that there has been conduct which amounts to a breach of the implied term of trust and confidence will mean, inevitably, that there has been a fundamental or repudiatory breach going necessarily to the root of the contract'. They stressed that the decision as to whether there was any such conduct was for the Tribunal to decide after hearing all the evidence. They therefore sent the case back to the ET to be reconsidered. In Leach v Ofcom [2012] EWCA CW959 the Court of Appeal looked at breach of trust cases from an employers perspective. In his Judgment Mummery LJ said 'The legislation is clear: in order to justify dismissal the breakdown in trust must be a "substantial reason." Tribunals and courts must not dilute that requirement. "Breakdown of trust" is not a mantra that can be mouthed whenever an employer is faced with difficulties in establishing a more conventional conduct reason for dismissal.'

The facts of this case were that the claimant worked for the respondent from 2005 until dismissal in January 2008. Just before his employment started he had been arrested in Cambodia on suspicion of child abuse, but proceedings were dropped for lack of evidence. In November 2007 the Metropolitan Police Child Abuse Investigation Command warned the respondent that the claimant posed a continuing potential threat or risk to children and that there was a risk of media exposure. The respondent questioned the claimant and dismissed him without notice, on the basis that he had not been honest about his earlier arrest, and that he represented a continued risk to children – particularly as the respondent in its role as regulator had a duty to protect children.

The employee claimed unfair dismissal but the Employment Tribunal found that the respondent had been justified in dismissing the claimant and that his lack of candor justified the summary dismissal. On appeal, the Employment Appeal Tribunal agreed that the dismissal was a fair one for some other substantial reason as required by s98(1)(b). However, the EAT expressed some unease about 'the growing trend among parties to employment litigation to regard the invocation of "loss of trust and confidence" as an automatic solvent of obligations' and whether dismissal purely to protect the respondent's reputation could be justified: on balance it was in this case.

The employee then appealed again to the Court of Appeal who dismissed the appeal. It held that notwithstanding misgivings about the possibility that an employee may lose their job because of a serious but untested allegations (i.e. that he was a continuing risk), it made the point that it would equally have been unreasonable to ignore the police disclosure, and held that the ET had been entitled to conclude that the employer’s reason for dismissal has been substantial enough to justify the dismissal, so that there was no error of law.

As it turned out, by the time the appeal reached the Court of Appeal, the claimant had been convicted of child sex offences and was serving a long prison sentence. Although an extreme example, this case is a reminder that there is no need for employers to await the outcome of criminal proceedings before making a disciplinary decision based on its own investigation, where there is a breach of trust and confidence involved.

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