In Rawlinson v Brightside Group Ltd, the EAT held that an employee had been wrongfully dismissed when he was given a misleading reason for his dismissal.
Mr Rawlinson worked for an insurance broker, Brightside, as in-house legal counsel. His employer had concerns about his capability but these concerns were not raised with Mr Rawlinson. Brightside’s CEO told Mr Rawlinson’s line manager that his capability concerns had made Mr Rawlinson’s position untenable. Rather than communicating this to the employee, it was decided to soften the blow by telling him his dismissal was due to a review of legal services. In this way, Mr Rawlinson would be expected to work his notice and complete a handover to his successor.
Mr Rawlinson was eventually informed of his dismissal and given three months’ notice. He was told that the employer had decided to use more external legal advice. Mr Rawlinson argued that this would be a TUPE outsourcing transfer and that his employment should transfer but he received no information about who would be providing legal services in the future. He resigned with immediate effect and brought a claim for constructive wrongful dismissal in the employment tribunal (for his notice pay) on the basis that Brightside had, by failing to inform and consult him over a TUPE transfer, acted in a way which threatened to destroy or damage the mutual trust and confidence between employer and employee.
The employment tribunal dismissed his claim, deciding that Brightside was not obliged to give a reason for the termination and had not breached the implied term of mutual trust and confidence.
The EAT did not agree and substituted a finding of wrongful dismissal. It held that employers who mislead an employee about the reason for dismissal will, in all but the most unusual of cases, act in a way which threatens to damage or destroy mutual trust and confidence. It determined that Brightside’s intentions in misleading Mr Rawlinson were mixed: to “soften the blow” and to keep the employment relationship alive for the handover period. However, in this case, the deceit was sufficient to be a fundamental breach of contract.
Where an employer has concerns about an employee’s performance or capability, it may be tempting to invent a reason for dismissal to soften the blow. Misleading an employee about the real reason for dismissal is risky and can lead to claims. Employers should bear in mind that employees may eventually see documents which record the real reasons for dismissal, either through a data subject access request or when documents are disclosed as part of tribunal proceedings. This case also highlights that employees may be able to found a constructive dismissal claim on a breach of contract by the employer which they were not aware of at the time of the resignation.