Handshake Ltd v Summers centred on a dispute about an arrangement under which the employee, a senior manager, had been offered 30% of the company's issued share capital on joining, to be issued in stages. The disagreement arose over the calculation of the profits; the manager alleged that the payments made did not match his entitlement.
Over a period of some three years the issue became contentious, culminating in a solicitors' letter from the manager stating that he had "lost all trust and confidence in his employer" and referring to a possible constructive dismissal claim. A few weeks later the manager was dismissed on notice, the reasons given being a breakdown in the working relationship and the fact that he was not as committed to the business as he had been. Claims for unfair dismissal and unlawful deduction from wages in respect of the share of profits (in excess of £300,000) inevitably followed.
The Tribunal found that the employee had been unfairly dismissed and that the real reason for dismissal was a "power struggle". The EAT upheld this decision. Although the letter from the solicitors was highly confrontational, neither employer nor employee had acted as if the relationship had broken down. The issue was in essence a debate over a term of employment and not a breakdown of trust and confidence, so it did not fall within the potentially fair "some other substantial reason" (SOSR).
This is the latest in a number of cases suggesting that relying on "loss of trust and confidence" within the category of SOSR is dangerous. In the high profile McFarlane v Relate Avon Ltd case, where a Christian counsellor was dismissed for his reluctance to help same sex couples, the EAT described its use as "unhelpful", since it can apply to almost any case where the employer is entitled to dismiss. Here the EAT commented that although the threshold for establishing SOSR is relatively low, and a breakdown in relations can amount to a substantial reason, it cannot be used to sidestep conduct issues. Employers should focus on specific conduct by the employee, such as a failure to comply with instructions or particular commitments. It should also be noted that it has been decided (at tribunal level) that the ACAS Code on disciplinary and grievance procedures can apply to SOSR dismissals, despite the fact that the Code does not expressly say this.