Honesty is always the best policy when it comes to employee terminations

None of like to have tough conversations with our employees about their poor performance, and we enjoy terminating their contract even less. Whilst it might be hard, the latest decision from the EAT in Rawlinson v Brightside makes clear the importance of telling it how it is, as much for your sake as for the employee. No matter how difficult the conversation might be, it could save you lengthy legal action in the long run.

The background

We’d like it if HR wasn’t complicated, but, unfortunately, the opposite is usually the case. In this situation, there should have been a straightforward non-completion of the probationary period, however Brightside made things a bit trickier. There had been concerns surrounding Mr Rawlinson, the new Group Legal Counsel, and his performance since early in his tenure, although nothing was raised with him. Behind the scenes, however, red flags had been popping up and mistakes had been identified within four months. Subsequently, it was decided that Mr Rawlinson’s employment would be terminated.  Whilst discussions of alternative arrangements for legal advice began, Mr Rawlinson remained none-the-wiser.

A month later, the Company informed Mr Rawlinson that it had reviewed their approach to managing legal services and concluded that the current arrangements were not working. Instead, they would be making greater use of external legal expertise and would no longer require Mr Rawlinson. He was given his contractual three months’ notice, with the Company expecting him to stay on and help with the transition to new arrangements.

But it wasn’t going to be that simple. Instead, Mr Rawlinson felt that if legal services were being outsources then it was a TUPE transfer and, at the very least, he should have been informed of the name of the firm to which the services were being outsourced. After realising that things didn’t quite add up Mr Rawlinson resigned and claimed constructive dismissal. Upon submitting a subject access request, it will come as no surprise that Mr Rawlinson soon came to realise that the real termination was because of his poor performance.

The case

Whilst Mr Rawlinson’s claims regarding non-compliance with TUPE information and consultation obligations were dismissed, as TUPE did not apply, there is a more pressing issue at hand. Mr Rawlinson’s claim for constructive wrongful dismissal was based on breach of the implied contractual duty of mutual trust. In fact, his argument was not that the implied term gave him a right to a fair procedure and to be told the real reason for his dismissal. Instead, he argued that there is an employer’s duty to be honest and not to mislead their employees.

The EAT found that in all but the most unusual cases the implied term means an employer must not deliberately mislead, even if their intensions are honourable. It does not constitute a broader obligation to volunteer information, but where a reason for termination is given, it must be done openly and honestly. The EAT did acknowledge that there may be particular cases in which the operation of the implied term would permit an element of deceit, but this did not apply here.

What this means

The case does not mean that there are more obligations on employers to inform employees either collectively or individually. Instead, the lesson is to not be afraid of being honest about employee performance, even if this is difficult. As more companies move towards a model of continual feedback rather than the traditional annual appraisal process, giving messages about ways to improve performance should be easier and news of under-performance should not come as a surprise. With the implementation of GDPR just a few months away, employers are under increasing pressure to be more transparent with their employees. This case demonstrates that if you choose not to be transparent, it is better to say nothing than to mislead.

If you’re affected by any of these issues, you can get expert advice from Alison here.

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