Breach of trust

We thought we would start off this month’s newsletter with a routine case law update. This case concerns race discrimination and constructive dismissal.

For the uninitiated, discrimination can be direct, indirect, harassment or victimisation. Constructive dismissal is a form of unfair dismissal and is defined under s95(1)c of the Employment Rights Act 1996 as: An employee terminating their contract in circumstances in which they are entitled to terminate it with or without notice by reason of the employer’s conduct.

One of the most common reasons an employee resigns is due to a fundamental breach of the implied term of trust and confidence found in all employment contracts. Some breaches of trust and confidence arise from how employers handle grievances and disciplinary procedures. However, they can also be related to pay issues and working arrangements.

The key case on this issue is Malik v BCCI. In that case the EAT stated that in order for a fundamental breach of trust must be a result of the employer’s conduct and that conduct must be without reasonable or proper cause.

In light of this, today’s questions are:

Can a failure to secure a lateral move due amount to race discrimination?

Can the rejection of a grievance on the above question amount to a fundamental breach of trust and confidence?

Mr Sharfudeen, the Claimant, was a store manager for Home Bargains, the Respondent, an operator of discount retail stores. The Claimant was an Indian national and applied to become store manager at one of the Respondent’s new stores.

The Respondent ran a selection process to decide which candidate would become manager of the new store. The Claimant scored badly and an external British candidate, who got the top score, was selected to become the manager of the new store.

At the same time the Claimant’s British assistant manager was given an interim manager role at a different store. The Claimant’s assistant did not have to go through any selection process to secure this role.

The Claimant raised a grievance for race discrimination about these incidents but the Respondent rejected the grievance. The Claimant resigned and brought claims before the ET. He cited the rejection of his grievance as a breach of trust and confidence and an act of race discrimination. The Claimant also bought a wages claim for failure to receive paternity pay when his son was born.

The ET rejected his claims. Firstly, the wages claim was made out of time. Secondly, the Respondent had to apply a selection process to all candidates and made a decision based on merit, not race. This was despite the test being geared towards promotions and not lateral transfers. Therefore, it was entitled to reject the Claimant’s grievance.

The Claimant appealed citing the aforementioned Malik principle. The EAT held that the Respondent’s decision not to grant the Claimant’s lateral transfer and subsequent rejection of his grievance may have been conduct that destroyed trust and confidence but it was not without reasonable cause. The appeal was rejected.

The Takeaway points:

In this case, no, deciding to employ a British national over a non-British national is fine if the decision is based on merit and not race.

Rejecting a grievance can result in a breach of trust and confidence but if the rejection of the grievance was with reasonable and proper cause then there is no liability on the employer for constructive dismissal purposes.