Breach of Trust and Confidence

Caragh Bailey
30/03/2022
38
5 min read
Breach of Trust and Confidence ACAS defined by Employment Law Friend
Trust and confidence between an employer and employee is considered by operation of law to exist in all contracts of employment.

Many contracts of employment will set this out explicitly, but whether they do or not, this is still considered in law to underpin every contract. It is often referred to as the implied term of trust and confidence because it is implied into every contract of employment (although it might also be expressly set out).

The implied duty of trust and confidence applies to both the employer and an employee. Trust and confidence means what is says on the tin: do both parties trust each other such that they can have a functioning employment relationship.

It does not mean you consider the other party to be beyond reproach, or even that you trust everything they say.

Is mutual trust and confidence common law?

Yes. It has arisen through case law and obliges both parties to not act in any way that is calculated to, or likely to, breach trust and confidence.

That it includes things which are likely to breach trust and confidence means that it can take place unintentionally by actions either party committed, which had the relevant affect on the other party in breaching trust and confidence.

Where there has been a breach of trust and confidence then that entitles the other party to the contract to end the contract with immediate effect (although they can do so with notice). In practice, this is most commonly where an employee claims constructive dismissal, by alleging that the employers conduct has breached the implied term of trust and confidence.

What constitutes a breach of trust and confidence?

Situations that would generally reach this threshold would be where an employee is sexually harassed at work, or demoted without cause. An employee can claim a breach of trust and confidence in the employer because of the actions of another employee who the employer is responsible for.

The concept of the implied duty of trust and confidence was development by the courts in the context of constructive dismissal (which by operation of law, is a type of unfair dismissal). However, trust and confidence must be mutual and both employer and employee must have this “feeling” about the other for the contract to continue.

Is breach of trust and confidence gross misconduct?

A breach of trust and confidence can occur on the other side too. Typically today, this is something which is added onto a disciplinary case. So if, for example, an employee is found to have committed some misconduct, say, fiddling expenses, then an employer will often “add” as a disciplinary offence and as a reason justifying dismissal that the employee’s actions have breached the implied term of trust and confidence, making any ongoing relationship untenable.

Arguably this is being used inappropriately to turn one offence into two offences, even though it is the same act, and to try and provide extra cover to an employer trying to justify a dismissal. In this example, then an employer will virtually always be entitled to dismiss the employee, and adding in the trust and confidence breach adds nothing at all.

Is breach of trust grounds for dismissal?

It is important to stress that actions by the employee which breach trust and confidence may and often will be gross misconduct, misconduct and grounds for dismissal, but the breach of trust and confidence itself is not gross misconduct, but rather a label that can be used in diverse situations.

So to continue the above example, whilst fiddling expenses may quite genuinely have breached trust and confidence and is clearly gross misconduct, it is not the case that breaching trust and confidence is gross misconduct itself, but rather something that has arisen in consequence of the gross misconduct.

For an employee facing an allegation of having breached trust and confidence, it is important to focus on the underlying conduct which led to this situation, and try not to engage with the issue of trust and confidence directly.

There are five potentially fair reasons for dismissal set out in the Employment Rights Act 1996 (these are only relevant where employees have more than two years service) – conduct, capability, redundancy, illegality and some other substantial reason. To justify a dismissal an employer must focus on one of these areas (or, occasionally more than one).

Trust and confidence will sometimes be relevant to dismissal cases involving some other substantial reason, but in practice adds nothing to a dismissal for misconduct, or any other type of dismissal, and it is best to ignore this and focus on the specific allegations.

It is easy for an employer to try and circumvent this by saying they have simply lost trust and confidence and therefore the employee is dismissed, but this does not reflect the legal restrictions set out on dismissing someone lawfully, and is often focused on when the grounds for dismissal are weak.

Although breach of trust and confidence can be grounds for dismissal, it will be exceptionally rare for this alone to justify a dismissal. Instead, it is the reason why there has been a breach of trust and confidence – for example stealing or lying – that is the grounds for dismissal.

It is rare for breach of trust and confidence to justify any actions by the employer; this concept was developed for employees and it is rarely correct to use it outside of a claim for constructive dismissal.

Do you have a breach of trust and confidence?
If you are going to resign under constructive dismissal you need to know where you stand within the law. If your case does not qualify as a breach of trust and confidence you may find yourself in breach of your contract. If you mishandle your resignation you could lose your right to claim.

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