November 27, 2017
Employment Law

Here are the facts:

In December 2014 Brightside Group, an insurance business, employed Mr Rawlinson as their in-house lawyer – Brightside’s “Group Legal Counsel”.

Mr Rawlinson’s employment contract gave him a 3 month notice period.

Shortly after Mr Rawlinson’s engagement, Brightside appointed a new CEO – a Mr Wallin. Mr Wallin became concerned early on about Mr Rawlinson’s performance and started an internal investigation within the business. Mr Rawlinson was aware that the senior management considered certain matters needed to be addressed but detailed concerns were not raised with him.

The upshot of the internal investigation was that by the end of March Mr Wallin decided that Mr Rawlinson’s position was untenable for reasons of his performance. Without communicating this to Mr Rawlinson the company began contingency planning for how to deal with accessing legal advice following Mr Rawlinson’s departure. The intention was to give Mr Rawlinson his 3 months notice and make him work that period to try and ensure a smooth transition.

On 14 April Mr Rawlinson met with senior management but was not told about the intention to dismiss him. During that meeting, Mr Rawlinson asked whether any further feedback had been received about him and was told it had not.

By 5 May, nothing had been communicated to Mr Rawlinson and Mr Wallin was frustrated that little progress had been made in terms of contingency plans. He raised his concerns with the Company Secretary who, at a meeting with Mr Rawlinson on 14 May dismissed him, informing him that the company were going to take a different approach to sourcing legal advice in the future and would use external legal advice reporting into the CEO. Mr Rawlinson was told he was being given three months’ notice and his dismissal would be confirmed in writing. He was deliberately not told that he was being dismissed due to concerns regarding his performance “to soften the blow”.

Mr Rawlinson was shocked by the decision to dismiss him and told the Company Secretary that, as Brightside were outsourcing the legal services to an external law firm, TUPE (the Transfer of Undertakings (Protection of Employment) Regulations 2006) would apply meaning that he would become an employee of the law firm that the work was being outsourced to. Mr Rawlinson asked for the name of this law firm but the Company Secretary declined to comment because of course there was no law firm.

In response to the Company Secretary’s failure to provide the name of the law firm, Mr Rawlinson said that he considered Brightside to be in breach of contract and that he would therefore not work his notice period.

Mr Rawlinson brought various claims in the employment tribunal. He claimed that Brightside were in breach of TUPE for failing to inform and consult him on the outsourcing of the legal function and he also brought a claim for constructive wrongful dismissal, contending he resigned in response to a fundamental breach of contract, namely the implied obligation in every employment contract that the employer will not act so as to breach the duty of mutual trust and confidence that exists between the employer and the employee.

The employment tribunal rejected the TUPE claim finding that there was no relevant transfer.

The employment tribunal also found that the implied obligation on employers to maintain trust and confidence had not been breached stating that Brightside had not been obliged to give Mr Rawlinson a reason for the termination of his employment. Brightside was not legally required to give Mr Rawlinson feedback on his performance or to warn him of the intention to dismiss him.

Mr Rawlinson appealed the decision.

Decision

The employment appeals tribunal found in favour of Mr Rawlinson. The tribunal concluded that in all but the most unusual of cases, the implied term (that an employer will not act so as to breach the duty of mutual trust and confidence that exists between the employer and the employee) had to import an obligation not to deliberately mislead. That did not necessarily place the employer under a duty to volunteer information but if the employer chose to volunteer information, it should do so in good faith.

Comment

Honesty is almost always the best policy. Perhaps Brightside thought they were doing Mr Rawlinson a service by not being candid about the real reasons for his dismissal. On the other hand, maybe Brightside were just trying to look after themselves. They wouldn’t have wanted a row with Mr Rawlinson – would you want to tell your in-house lawyer that you were dismissing him because he wasn’t up to his job? When looking at the case the appeals tribunal noted that Brightside had not been “entirely altruistic” – they had wanted Mr Rawlinson to work his notice period and to keep him on-side to help with an orderly hand-over.

Whatever the motivation, coming up with what Brightside thought was an inoffensive way to deal with Mr Rawlinson’s dismissal backfired. Mr Rawlinson thought that Brightside were being deliberately obstructive with him by failing to tell him the name of the outsourced law firm. As a result, he resigned immediately so there was no orderly 3 month hand-over and Brightside ended up in the employment tribunal.

Being honest with employees makes it less likely to trip the employer up. It is worth bearing in mind that the “real” reasons for dismissal are likely to come out by the disclosure required if the employees makes a subject access request.