Should an employer give a short-term employee the true reason for dismissal?

In Rawlinson, the EAT allowed an appeal in which an employer’s “white lie” was a breach of the implied duty of trust and confidence required to uphold an employment contract.

Mr. Rawlinson was the in-house lawyer at Bright Group Ltd. (“Brightside”), an insurance broking business. Approximately 6 months into employment, the CEO of Brightside had concerns over Mr. Rawlinson’s performance (although performance was never raised with him) and decided to dismiss him for 3 “red card” offences. Mr. Rawlinson was subsequently informed that his employment was being terminated on contractual notice. In an attempt to “soften the blow”, or, rather as it later was revealed in the proceedings, to organise his replacement and facilitate an orderly handover during the three month notice period, Mr. Rawlinson was informed that the reason for his dismissal was a result of Brightside’s decision to outsource its legal services. Mr. Rawlinson believed that Brightside was acting in breach of contract by failing to follow the necessary TUPE information and consultation process. He resigned and claimed constructive wrongful dismissal. It was not until disclosure under a subject access request that Mr. Rawlinson realised that the true reason for his dismissal was performance related.

In the EAT judgment, Judge Eady QC said that an employer does not have a duty to tell an employee the reason for dismissal or necessarily a broad obligation to “volunteer information”, however, where they have chosen to do so, the implied term of trust and confidence requires that it is done in good faith and gives rise to an obligation not to deliberately mislead the employee. While there may be particular circumstances where a white lie may “serve some more benign purpose”, giving false reasons for a dismissal does not fall into this category. When choosing to provide an employee with information, it must be done in good faith.

While it may sometimes be preferred (or even easier) to shield employees from a harsh reality regarding poor ability and performance, employers should ensure that managers are well trained and equipped to deal with difficult issues head on and not to mislead employees.

Some employers may also rely on other reasons to terminate in a genuine performance related situation to avoid going down a lengthy performance improvement plan with the employee. This case also serves as a reminder of the potential pitfalls of doing so, if the true reason for dismissal is discovered. The employee’s response to the false reason given, was to walk out, giving rise to loss of earnings during his notice period.

Concocting a lie about the reasons for Mr. Rawlinson’s dismissal could arguably be seen as a result of Brightside’s failure to raise concerns about his performance earlier. Had this been dealt with head on and in a timely manner, there would have been no need to shield the truth from Mr. Rawlinson later down the line.

It should also be noted that this was the dismissal of an employee with less than the 2 years’ service required to obtain the right not to be unfairly dismissed. The employer misled Mr. Rawlinson in an attempt to get him to keep performing the contract, whilst they arranged a handover. In fact, those very actions broke the implied term of confidence and trust entitling Mr. Rawlinson to leave and claim the balance of his notice pay.  In short:

“Honesty is the best policy, in love as in law”

– Louisa May Alcott