News & Views

Notice pay claim over employer’s “white lie” succeeds

HK
BY Heather Kemmett
Employment law

The recent EAT case of Rawlinson v Brightside Group Limited, has highlighted the need to be clear about the reason for a dismissal, and not to shy away from the difficult conversations that come with it. 

Mr Rawlinson was employed as legal counsel for the respondent. Performance concerns were identified which Mr Rawlinson was aware of, but they were not dealt with. The respondent decided that Mr Rawlinson’s position had become untenable and decided to end his employment. Rather than address the performance issues, Brightside decided to tell the claimant that it was restructuring the legal department and no longer needed his services. The respondent saw this as a “white lie” which would soften the blow of the dismissal.

However, part of the explanation given to the claimant was that the respondent would be outsourcing its legal services. Mr Rawlinson rightly pointed out that, if his work was being outsourced, it was likely that there would be a TUPE transfer of his employment to the new provider. Since Brightside was not actually planning to outsource services, it was unable to give Mr Rawlinson any further detail about the “outsourcing”. Mr Rawlinson promptly resigned as a result of what he saw as Brightside’s breach of contract and suffered loss of earnings during what would have been his notice period.

Even though the reason for termination was a dismissal and Mr Rawlinson had less than two years’ service, he was able to bring a claim for notice pay based on breach of contract. Even though the respondent was not obliged to give him information about the reason for his dismissal, the EAT found that the way it had misled the claimant amounted to a breach of the implied term of trust and confidence. Since the claimant had resigned and suffered loss as a result of this breach, he was entitled to payment for the notice period.

The case serves as an object lesson to employers on a variety of points. Firstly, the need to concoct a lie about the reason for Mr Rawlinson’s dismissal arguably arose as a result of Brightside’s failure to address the performance issues in a fair, proportionate and timely manner. Had they been clear about those issues, there would have been no need to “soften the blow” of a dismissal because it would not have come out of the blue.

Employers should be wary about attempting to disguise the true reason for a dismissal under any circumstances, however, one can empathise with a desire not to hurt Mr Rawlinson. Perhaps the employer genuinely had Mr Rawlinson’s feelings at heart. However, one suspects that this was really down to a reluctance to have a difficult conversation with him. Employers should ensure that managers are well equipped to deal with poor performance issues and are confident and capable of tackling difficult subjects. Our Management Skills Bootcamp running in March in Glasgow and Edinburgh aims to do just that; you can book your managers’ places here.

Finally, one wonders whether the cost of defending the claim both at employment tribunal and employment appeals tribunal level was commercially sensible for Brightside. Mr Rawlinson’s losses were limited to notice pay so the respondent would have had a very clear picture of the potential liability from the outset. What it may not have had was certainty over legal fees. We often hear from employers who have been faced with a surprisingly large legal bill following tribunal action. Astonishingly, in some cases it is more than the maximum liability of the claim. With LAW’s fixed fee tribunal service, employers will never have a surprise bill and are able to gauge from the outset of litigation whether their money would be better spent settling a claim than defending it at all costs. Click here to find out more about our litigation and legal insurance services.

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