Giving a false or incorrect reason for terminating employment could:
- Breach mutual trust and confidence
- Release the employee from restrictive covenants
- Give grounds to claim for loss of earnings over the notice period if the employee walks out
- Open up arguments for discrimination, failing to inform and consult under TUPE and for breach the ACAS Code.
The Employment Appeal Tribunal has confirmed where the reason is given, the employer is obliged not to mislead the employee.
Terminating on the grounds of conduct or capability usually involves following the ACAS Code, holding several meetings, issuing warnings and giving chance to improve which can take time and resources.
A restructure, redundancy or outsourcing the work can involve shorter processes. However, to act in good faith and to reduce the risk of claims, the facts must support the reason given. Outsourcing would also require the TUPE obligations to be followed.
Failing to give the real reason risks breaching the contractual and statutory rights of an employee and releasing the employee from their post-termination obligations.