Legal opinion: When can an employee be dismissed due to a breach of trust and confidence?

Implied in every contract of employment is a term that requires both employers and employees to avoid behaving in such a way as to destroy the relationship of trust and confidence that should exist between them. The alleged breach of this implied term is frequently used by employees to support a claim for unfair constructive dismissal. This is not, however, exclusively reserved for employees. Employment lawyer Susanna Gilmartin asks in what circumstances can an employer rely upon a breakdown in trust and confidence to fairly dismiss an employee?

What is the real reason for dismissal?

The case of Governing Body of Tubbenden Primary School v Sylvester considers this question in some depth. Ms Sylvester was dismissed for reasons relating to her friendship with a former colleague who had been arrested for alleged possession of indecent images of children. The school initially raised concerns about Ms Sylvester’s friendship with the former colleague, but took the matter no further. Some months later, she was dismissed on the grounds that trust and confidence between her and the headteacher had broken down, making her position untenable. The loss of trust and confidence effectively arose out of concerns regarding Ms Sylvester’s friendship with the former colleague.

The employment tribunal had to wrestle with the question of what, in law, was the potentially fair reason for dismissing her. Was it a loss of trust and confidence, which might constitute what lawyers refer to as “some other substantial reason” for dismissing an employee, or was it a misconduct dismissal dressed up in a different way? A previous case, Ezsias v North Glamorgan NHS Trust, had warned employment tribunals to be on the lookout for such cases.

Unfair dismissal decision upheld

What the employment tribunal found was that there had genuinely been a breakdown in the relationship between the head teacher and Ms Sylvester. They appeared to accept that this could give rise to a fair reason for dismissal. However, in this case, the tribunal concluded that the dismissal was unfair because:

• the loss of trust and confidence emanated from issues relating to the conduct of the employee; and
• the panel was dissatisfied with the way in which the school had dealt with those conduct issues. In particular, the employee was never warned that her friendship was putting her job at risk.

On appeal to the Employment Appeal Tribunal (EAT), the school argued that the tribunal had been wrong to look at the reasons for the breakdown in trust and confidence, if it accepted that such a breakdown had occurred. This argument was rejected and the tribunal’s decision was upheld.

Leach v Ofcom

The Court of Appeal addressed employers’ use of breakdown in trust and confidence in the recent case of Leach v The Office of Communications. The court upheld the tribunal’s decision that the respondent’s decision to summarily dismiss an employee citing a breakdown in trust and confidence after investigating information it had received from the Metropolitan Police relating to child abuse in Cambodia was reasonable in all the circumstances. The Court of Appeal expressed its concern about a growing trend of employers relying on a breakdown of trust and confidence as the reason for dismissal.

Reason for dismissal must be serious and substantial

There can be many reasons why the employment relationship can break down – misconduct and underperformance included. It is important that in such cases employers deal with the particular issue in question rather than trying to rely on the breakdown in trust and confidence as possibly the easier option. If an employer wishes to rely on breakdown in the relationship between employer and employee to dismiss, in order to justify dismissal, the breakdown in trust must be a substantial reason. The reputation of the respondent in the Leach case was an important consideration. The respondent risked attracting negative publicity if it had failed to take action because part of its role involves considering the vulnerability of children. The Court of Appeal recognised the important of this.

These two cases are useful reminders to advisers and employers that terminating for breach of the implied term of trust and confidence needs to be thought through carefully. We must ask ourselves what is the reason that has caused the loss of trust and confidence to get to the heart of the issue. Then we must assess whether or not that reason is sufficiently serious and substantial to justify us relying on it to terminate.

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Susanna Gilmartin is employment partner at Thomson Snell & Passmore.