Rawlinson v Brightside Group Ltd

An employer is not generally obliged to volunteer the reason for dismissing an employee. However, where it chooses to give a reason, the implied term of trust and confidence ordinarily requires the explanation to be given in good faith and not deliberately misleading.

A claim for financial loss caused by that breach may fall outside the Johnson exclusion zone where the breach precedes and is independent of the dismissal. Loss of notice pay may therefore be recoverable where the employee resigns in response to the misleading explanation and thereby loses the opportunity to work the notice period.

The Claimant, Group Legal Counsel, was contractually entitled to three months’ notice. The Respondent decided to dismiss him because of performance concerns but deliberately told him that his role was changing because legal services would be reorganised and outsourced.

The Claimant believed that this involved a service provision change under the Transfer of Undertakings (Protection of Employment) Regulations 2006. He resigned without working his notice and claimed constructive wrongful dismissal. The Employment Tribunal rejected the claim, finding that the Respondent had no obligation to disclose the true reason and that the complaint concerned the manner of dismissal.

The appeal concerned whether the misleading explanation breached the implied term of trust and confidence and whether the resulting notice-pay loss was excluded by Johnson v Unisys Ltd.

1. The appeal was allowed. The Employment Tribunal’s dismissal of the notice-pay claim was set aside, and the claim was upheld. Any unresolved issue as to the amount of compensation was to be remitted to the Employment Tribunal.

2. The implied term required the Respondent, absent reasonable and proper cause, to avoid conduct likely to destroy or seriously damage trust and confidence. That term did not impose a general duty to volunteer information or disclose the true reason for dismissal. But once the Respondent chose to provide a reason, it assumed an obligation to give that reason in good faith and not deliberately mislead the Claimant.

3. Whether the implied term was breached was an objective, context-specific question for the Employment Tribunal. It had to consider all the circumstances from the perspective of a reasonable person in the position of the innocent party. The possibility of a benign white lie did not assist the Respondent on these facts.

4. The Tribunal wrongly treated the complaint as concerning the manner of dismissal. The complaint concerned the false explanation given while the Respondent intended the employment relationship to continue during the notice period. The deception therefore constituted an antecedent breach of the implied term, distinct from the dismissal itself.

5. Under the boundary identified in Eastwood and Anor v Magnox Electric plc, McCabe v Cornwall County Council, a cause of action acquired before dismissal remains independent of the later dismissal. Loss flowing from the antecedent breach falls outside the Johnson exclusion zone. The Claimant’s loss of notice pay was caused by his response to the false explanation and was recoverable.

1. Employment Appeal Tribunal: appeal allowed. The Employment Tribunal’s dismissal of the constructive wrongful-dismissal notice-pay claim was set aside, with the claim upheld and remedy potentially remitted.

2. Employment Tribunal: the Claimant’s TUPE, collective redundancy and constructive wrongful-dismissal claims were dismissed; the Respondent’s contract claim was upheld.