White lies – why it pays to tell the truth on terminating employment
01 Dec 2017
The EAT’s recent decision in Rawlinson v Brightside Group Ltd is a sobering lesson for employers in being honest with employees as to the reasons for their dismissal.
Mr Rawlinson was the new Group Legal Counsel for Brightside Group. There were performance concerns very early on in Mr Rawlinson’s employment but these were not addressed with him. He had made several “red card” mistakes (unbeknownst to Mr Rawlinson) which led the Company to conclude that his employment should be terminated because of performance. The Company then turned its attention to how it would deal with its legal service requirements once Mr Rawlinson’s employment had ended. Throughout this time, nothing was said to Mr Rawlinson to alert him to the Company’s intention that he be dismissed.
Some weeks later, Mr Rawlinson was told that the Company had reviewed its approach to managing its legal services requirements and concluded that current arrangements were not working, so wanted to take a different approach. Mr Rawlinson was told the Company would utilise more external legal expertise. He was told he was being given three months ‘notice and this would be confirmed in writing. Importantly, he was not told that he was being dismissed due to concerns regarding his performance. This was a deliberate decision by those involved to “soften the blow”.
Mr Rawlinson’s immediate reaction was that the TUPE Regulations would apply to any outsourcing of legal services and, therefore, he ought to transfer to the new provider. He asked the Company when the services were to be outsourced and to who. When the Company refused to comment, Mr Rawlinson resigned with immediate effect, claiming constructive dismissal. On receiving a response to his data subject access request, Mr Rawlinson finally learned that the reason for his dismissal was his performance.
Whilst Mr Rawlinson’s claims under the TUPE Regulations were dismissed (as there was no TUPE transfer) his claim for constructive wrongful dismissal based on breach of the implied duty of mutual trust and confidence succeeded. Mr Rawlinson argued that there was a duty on the part of an employer to be honest and not to mislead. The EAT agreed that, in all but the most unusual of cases, the implied term includes an obligation not to deliberately mislead. This does not mean an employer has to volunteer information, but where it chooses to do so, it must be done in good faith. Mr Rawlinson was therefore entitled to damages for his notice period.
What ought to have been a clear-cut termination for non-completion of a probationary period became a protracted dispute in relation to the application of the TUPE Regulations and implied duty of mutual trust and confidence. This could have been avoided had the Company been upfront with Mr Rawlinson about the problems with his performance.
Whilst being prepared to have difficult conversations has long been part of good employment relations practice, employers now have an additional incentive to be transparent and honest with their employees. Alternatively, employers would be advised to say nothing at all.