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Why lying about the reason you dismissed an employee could prove expensive

It is often said that the truth costs nothing but a lie could cost you everything. In a recent EAT case, giving the true reason for a dismissal would have cost a lot less. Rhian Radia explains

In a recent Employment Appeal Tribunal (EAT) decision, Rawlinson v Brightside Group, the employer, Brightside, told Rawlinson he was being dismissed not because of his performance (although this was the reality as a result of a new chief executive coming on board and having immediate concerns about whether Rawlinson was up to the job) but because his role was going to be outsourced and that his duties were being reorganised.

Maybe Brightside thought this would soften the blow. Redundancy always feels a less personal reason for dismissal than criticising an employee’s performance. Indeed, the employment tribunal in this case remarked that it was fully aware that, in many similar situations, employers give employees an incorrect reason for terminating employment to make the news easier to swallow.

Another factor was that Brightside wanted Rawlinson to work out his three-month notice period to ensure a smooth handover, and thought a softer reason for dismissal might assist with this.

There was little that was smooth about what happened next. Rawlinson was Brightside’s legal counsel and it was perhaps inevitable that he might start to ask questions about the imminent outsourcing. Rawlinson pointed out that the outsourcing would amount to a TUPE transfer. When he received little explanation or answers to his questions, he resigned claiming constructive dismissal as a result of a breach of the implied term of mutual trust and confidence.

Rawlinson then found out – from emails he received in response to a subject access request – that the real reason for the termination of his employment was performance. The chief executive had said in an email that he had found three ‘red card’ mistakes and that there was no way forward in terms of Rawlinson’s future employment.

Rawlinson brought a claim against Brightside for payment of his notice period and compensation for failure to inform and consult under TUPE.

Things did not go Rawlinson’s way at the employment tribunal, where his case did not succeed as the tribunal found him to be complaining about the manner of his dismissal. The case law is clear that it is not possible to receive compensation for a breach of contract in this situation. The EAT, however, reached a different conclusion as it considered that Rawlinson was not complaining about the dismissal itself but about the false information he had received about why he was being let go.

Rawlinson did not know at the time of his resignation that Brightside had lied to him, but the EAT decided that lie had provided him with a good enough reason for resigning and considering himself constructively dismissed.

This case makes it clear that it would be a breach of the implied duty of trust and confidence if an employer misled an employee about the reason for bringing employment to an end. It would have been safer for Brightside to give no reason at all (given it was not obliged to as Rawlinson did not have unfair dismissal rights).

Keeping an employee in the dark about why their employment is ending does not breach trust and confidence but telling a lie does, it seems. The judge in this case found that lie to be far more than a “white lie that serves some sort of benign purpose”. The moral of the story is to be transparent – or, if not, to avoid dishonesty.

This article first appeared on People Management, February 2018.