In Rawlinson v Brightside Group, the EAT held that the duty of trust and confidence includes an obligation on an employer not to deliberately mislead an employee as to the real reason for dismissal. In that case, the employer decided to dismiss an in house legal counsel due to his poor performance; rather than go through a performance process, the employer told the employee he was being dismissed with notice as they had decided to use external law firms instead. Its motivation was to ensure the employee worked his notice to allow time to recruit a replacement, but also to ‘soften the blow’.
The employee wrongly thought he should be transferring under TUPE and resigned on the basis that the breach of TUPE information and consultation was a breach of trust and confidence. Although there was no TUPE transfer and no obligation to consult, the EAT ruled that the giving of a false reason was a breach of trust and confidence and the employee was entitled to rely on this to justify his resignation and to claim loss of earnings over his notice period. Damages for breach of contract cannot be awarded in respect of the ‘manner of dismissal’ (as the remedy for this is an unfair dismissal claim), but the breach here was the giving of a false reason, which was intended to keep the employment relationship alive during the notice period rather than being a ‘manner of dismissal’.
‘Softening the blow’ in this way can therefore be counterproductive: if the employee resigns (whether because they find out the reason is false or otherwise), they may be able to claim loss of earnings for the notice period and will also escape the restraints of any restrictive covenants.