The EAT has held in Handshake Ltd v Summers that an employer could not rely on 'some other substantial reason' (SOSR) to justify dismissing a senior employee following a dispute over his profit share and contractual terms and conditions.
Mr Summers was a senior manager at Handshake Ltd who had, upon joining in 2003, been offered 30% of the company’s share capital. This share capital never materialised but other payments were made to Mr Summers, which were described as profit shares. A dispute arose over the calculation of the company’s profits and Mr Summers’ contractual terms and conditions.
Mr Summers’ solicitor wrote to Handshake Ltd in 2009 making reference to a constructive unfair dismissal claim and a breakdown in trust and confidence. Mr Summers was ultimately dismissed, on notice, later in 2009, on the basis of a breakdown in the working relationship, which the employer alleged constituted SOSR.
A claim was issued for unfair dismissal (and unlawful deduction from wages) on the basis that there was no breakdown in trust and confidence and that Mr Summers had instead been dismissed because of the on-going power struggle between himself and the directors of the company.
The tribunal and the EAT, following the subsequent appeal, held the dismissal was unfair, accepting Mr Summers’ assertions about a power struggle (but reducing his compensation by 40% due to finding that there was contributory fault on his part). The EAT held that, while reference had been made to a breakdown of trust and confidence in correspondence between the parties, neither had acted as if the relationship was irreparable and that instead this was a case involving a power struggle over pay, which did not fall within SOSR.
It appears from this case that dismissal arising from a power struggle will be unfair and will not be caught by SOSR. It is possible that, where a power struggle becomes intense or prolonged, it could amount to a breakdown of trust and confidence but that is likely to be rare and employers would be well advised not to rely on this in the vast majority of cases.