Employer Pays for Unwise Attempt to Soften the Blow of Dismissal

When workers are dismissed for poor performance, it is understandable that some employers might wish to soften the blow by giving some other reason. However, as one case showed, there is a duty not to mislead employees and such deviations from the truth can cause a host of difficulties.

The case concerned a lawyer who worked for an insurance broking firm. His boss took the view that he had made several serious mistakes and had concerns about his capabilities. A decision was taken to dismiss him, but the intention was that he would work out his three-month notice period.

Rather than being informed of the true reason for his dismissal, the man was told that a decision had been taken to reorganise his department and that greater reliance would in future be placed on external legal expertise. He took the view that such outsourcing would be a relevant transfer and that the employer had breached the information provision and consultation requirements enshrined in the Transfer of Undertakings (Protection of Employment) Regulations 2006. Only following his resignation did he discover the real reason for his dismissal.

His complaint of wrongful dismissal was, however, dismissed by an Employment Tribunal (ET). It found that the man’s real complaint related to the manner of his dismissal and that the employer had not breached its implied obligation to maintain the relationship of trust and confidence between them.

The ET found that the man had neither been entitled to resign when he did, nor to treat himself as having been dismissed. He was himself in breach of contract in refusing to work out his notice and the employer was entitled to reclaim from him over £1,000 that he had been overpaid for days not worked.

In upholding his appeal against those rulings, the Employment Appeal Tribunal (EAT) noted that the employer had been intent on saving the man’s feelings and making the termination of his employment more palatable. However, in resorting to falsehood, it had breached its obligation not to mislead him. The ET having erred in law, the EAT substituted a finding that the man was entitled to damages equal to the notice pay that he would have received had he not resigned.

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