Parker v BC Softwear Ltd

An employer does not breach the implied term of mutual trust and confidence by communicating an honestly held and properly grounded belief that an employee has committed fraud, where the circumstances give the employer reasonable and proper cause. Whether such communication is contractual misconduct is context-sensitive.

A failure to follow disciplinary procedures may contribute to a breach of that term. The tribunal must assess what occurred against the Malik test. An Employment Tribunal determining disputed evidence at a hearing may resolve a direct conflict of evidence; guidance to employers about investigation does not require it to decline to decide between competing accounts.

The Claimant resigned while on sabbatical after the Respondent's managing director discovered payments from a linked company into his account. He alleged that the Respondent had falsely accused him of fraud, told colleagues and family friends, failed to investigate formally, failed to recognise an extended sabbatical, and initially refused his return to work.

The Employment Judge rejected all alleged repudiatory breaches and dismissed the constructive unfair dismissal claim. The Judge also found that the payments were unauthorised and dishonest and, if there had been a dismissal, the Claimant would have received no award.

The Claimant appealed, challenging the conclusions on disclosure of the allegation, the absence of a formal investigation, the treatment of resignation and unfair dismissal, and the finding of dishonesty.

1. Appeal dismissed. The Employment Judge was entitled to find that there was no fundamental breach of contract and therefore no constructive dismissal.

2. The Judge had applied the correct implied-term test. In a small, substantially family-run company, the managing director was entitled to expect to know of and authorise the payments. Having reasonably concluded that she had not authorised them and that fraud had occurred, she did not breach the implied term of trust and confidence by telling the senior management team and family friends what she believed. The reasons were sufficient: the parties could understand the conclusion and the Appeal Tribunal could review it for legal error.

3. The failure to follow a proper procedure can amount to, or contribute to, a breach of the implied term. The relevant task was to assess the facts against the Malik test. The Employment Judge permissibly found that some investigation had occurred, that the material facts about the payments were known, and that it was not a breach to await the Claimant's return before interviewing him. The Claimant never gave a return date after the Respondent invited him to do so.

4. Because there was no repudiatory breach, the omissions of findings about the reason for resignation and, alternatively, ordinary unfair dismissal were not material errors of law. The latter issues arose only if constructive dismissal had been established.

5. The finding of dishonesty was in any event open to the Employment Judge. The guidance in Roldan assists employers investigating conflicting accounts, but it does not impose a rule requiring an Employment Judge, after hearing primary evidence from both sides, to leave the issue unresolved by relying on the burden of proof. The Judge could accept the managing director's evidence and reject the Claimant's and supporting witness's evidence for the reasons given.

• Employment Appeal Tribunal: dismissed the Claimant's appeal and upheld the dismissal of the constructive unfair dismissal complaint.
• Employment Tribunal: Employment Judge Gumbiti-Zimuto, by a judgment dated 23 February 2017, dismissed the constructive unfair dismissal complaint.