Honesty is always the best policy when it comes to employee terminations

While very few line managers relish the prospect of giving employees the hard facts about their poor performance, the latest decision from the EAT in Rawlinson v Brightside is a salutary lesson that dressing up a termination as something else to try and soften the blow is not necessarily the best option and could result in expensive consequences. Transparency and honesty is key no matter how hard that may be for the employee to hear and for the manager to deliver.

It’s good to talk

This should have been a straightforward non-completion of probationary period/poor performance dismissal but, as is often the case with staff management, not everything is as uncomplicated as it may at first appear. Concerns about the capability of the new Group Legal Counsel, Mr Rawlinson, arose very early on in his tenure but nothing was raised with him. Behind the scenes, “red card” mistakes had been identified within four months, and it was decided that Rawlinson’s position was untenable and his employment would be terminated. Discussions around alternative arrangements for legal advice began in earnest. Still nothing was said to Rawlinson.

A month later, Rawlinson was informed that the Company’s approach to managing legal services had been reviewed, and, after taking feedback from stakeholders, the conclusion was that the current arrangements were not working. In future, they would make greater use of external legal expertise. He was given his contractual three months’ notice, and the thinking was that he would stay on and help with the transition to the new arrangements.

Alarm bells starting ringing with Rawlinson, who took the view that if legal services were being outsourced, it was a TUPE transfer, and his employer should at the very least be informing him of the name of the firm to whom the services were being outsourced. Things weren’t stacking up, and Rawlinson resigned, claiming constructive dismissal. It will come as no surprise that the real reason for the termination (i.e. his performance) became apparent to Rawlinson after submitting a subject access request.

Mutual trust and confidence

Rawlinson’s claims regarding non-compliance with TUPE information and consultation obligations were dismissed, as TUPE did not apply, but this is not the point of interest in this case. Instead, it is Rawlinson’s claim for constructive wrongful dismissal based on breach of the implied contractual duty of mutual trust and confidence that allowed him to make a claim where he would not otherwise have been able given his short length of service. His argument was not that the implied term gave him a right to a fair procedure and to be told the real reason for his dismissal. He instead contended that there is a duty on the part of the employer to be honest and not to mislead.

The EAT had little difficulty in finding that in all but the most unusual cases, the implied term means an employer must not deliberately mislead, even if the motivation for doing so is to soften the blow. It does not constitute a broader obligation to volunteer information, but where a reason for termination is given, it must be done in good faith. The EAT did acknowledge that there may be particular cases in which the operation of the implied term would permit an element of deceit (“the white lie that serves some more benign purpose”) but this was not present in this case.

Where you have employees on substantive contractual packages, gifting them a breach of contract claim in these circumstances could prove very costly even if there is no separate unfair dismissal claim to be concerned about.

Lessons for employers

• The case does not mean that there are any additional obligations on employers to inform employees either collectively or individually; rather, the lesson is to give messages, where appropriate, and to not be afraid of having difficult conversations.
• As more and more companies move towards a model of continual feedback rather than the traditional annual appraisal process, giving messages about ways to improve performance should be easier and news of under-performance should not come as a shock.
• Employers are under increasing pressure to be more transparent with their employees in a wide range of areas, ranging from how employee data is used, to pay policies and practices and how that impacts on the gender pay gap and salary quartiles. This case highlights the fact that if you choose not to be transparent, it is better to say nothing than to mislead.
• Subject access requests will not go away under GDPR; if anything it is easier from an employee’s perspective, making data creation and management a key concern for people managers.