In Rawlinson v Brightside Group Ltd (UKEAT/0142/17), the Employment Appeal Tribunal had to decide whether an employee who resigned after being given a false reason for dismissal by his employer could bring a claim for breach of contract for his notice pay.

Mr Rawlinson was employed as group legal counsel by Brightside Group Ltd (the Company) from 1 December 2014. He had a three month notice period. A new CEO was appointed in January 2015 and identified concerns with Mr Rawlinson's performance, which were not raised with him. In March 2015, the CEO told Mr Rawlinson's line manager that Mr Rawlinson's position was untenable. It was decided not to tell Mr Rawlinson that he was being dismissed due to concerns about his performance but instead to state that his dismissal was a consequence of a review of legal services, in order to soften the blow. He was to be given notice and required to work his notice period so that a replacement could be recruited and an orderly handover could take place.

On 14 May 2015, Mr Rawlinson was told that there was to be a re-organisation of his work, which would be carried out in future by an external service provider. He was given three months' notice and told that his dismissal would be confirmed in writing. He was not told that he was being dismissed due to concerns about his performance. Mr Rawlinson believed the outsourcing would be a TUPE transfer and asked to whom the services were being outsourced. His line manager refused to comment. Mr Rawlinson considered that the Company was acting in breach of contract. He said that he was resigning in response to the breach and refused to work his notice period. He brought claims in the employment tribunal (ET) for constructive wrongful dismissal for his notice pay, a failure to inform and consult under TUPE and a breach of the consultation requirements on a collective redundancy.

Employment tribunal decision

The ET rejected Mr Rawlinson's TUPE claim, finding that there had been no relevant transfer, and rejected his collective redundancy claim since he had not been dismissed for redundancy. It rejected his claim for constructive wrongful dismissal because it found that the Company had not breached the implied term of mutual trust and confidence. His claim was essentially for damages for the manner of his dismissal, which was not permitted. Mr Rawlinson appealed, as the ET declined to review its decision.

Employment Appeal Tribunal decision

The Employment Appeal Tribunal (EAT) allowed the appeal and held that Mr Rawlinson's wrongful dismissal claim succeeded. He was entitled to be paid the balance of his notice pay. The EAT found that the Company's reasons for misleading Mr Rawlinson as to the reason for his dismissal had not been entirely altruistic: it had wanted him to work his notice period so that it could find a replacement and carry out a handover. The implied term had to include an obligation not to deliberately mislead an employee. Where the employer decided to tell the employee the reason for his dismissal, it had to tell him the true reason. There might be cases where operation of the implied term could permit some element of deceit but this was not one of those cases.

While employers may occasionally be tempted to tell a white lie to avoid hurting an employee's feelings, this case shows that this can backfire badly – particularly where the employer was also serving its own interests in misleading the employee.

It is likely that an employee who is suspicious will eventually find out the real reason for their dismissal anyway, whether by making a subject access request under the Data Protection Act (as Mr Rawlinson did) or via the disclosure process if they bring a claim.

In addition, an employer can find themselves in hot water if they have given an incorrect reason for dismissal to an individual who then claims social security benefits or makes a claim under an insurance policy; the Department for Work and Pensions and/or the insurer may contact the employer for confirmation of the reason for dismissal and further details.