The trust and confidence mantra: case round-up for NHS employers

Author: Capsticks Solicitors

It is not uncommon in the health service for dismissal letters to refer to the loss of trust and confidence in the employee as the reason for dismissal. Often, this relates to senior-level employees where the loss of trust and confidence may be felt more acutely by the organisation. However, there are dangers in relying on a loss of trust and confidence as the reason for dismissal.

Capsticks highlights some of the case law that NHS employers should take into account before referring to the loss of trust and confidence as a reason for dismissal.

The reason for dismissal

There are five potentially fair reasons for dismissal in the Employment Rights Act 1996. These are conduct, capability (which includes dismissal on the grounds of unsatisfactory performance and ill health), redundancy, legal restriction (where it has become illegal to continue to employ the person), and "some other substantial reason". Therefore, where an employer dismisses an employee and cites a loss of trust and confidence as the reason for dismissal, this can present a difficulty for the employer if the case goes to a tribunal as it will need to demonstrate that the dismissal was for one of the five potentially fair reasons.

Setting out the background reasons to show what gave rise to the loss of trust and confidence that led to the dismissal will place the employer in a stronger position. However, in these cases, it is often better for the employer to rely on capability as the reason for dismissal.

Demonstrating a loss of trust and confidence

Where the employer wishes to rely on a loss of trust and confidence as the reason for dismissal, it should be prepared to demonstrate that there has been a complete breakdown of trust and confidence between the employee and employer as a whole. In Cox v Northern Devon Healthcare NHS Trust EAT/0623/11, the Employment Appeal Tribunal (EAT) concluded that there may be a loss of trust and confidence between one employee and another, but that is not the same as a complete breakdown of trust and confidence between the employee and the employer, particularly in the context of a sizeable employer. The trust had offered the claimant redeployment and this was inconsistent with the idea that there was a lack of trust and confidence between the employer and the employee.

Difficulties associated with giving the reason for dismissal as "some other substantial reason"

In the event of a breakdown in the working relationship between the employer and the employee, the employer may seek to give the reason for dismissal as "some other substantial reason". However, this is rarely an easy route to a fair dismissal. A tribunal will usually wish to see that all possible alternatives, such as mediation between the parties or considerations of redeployment, have been explored before a decision to dismiss is made.

Further, where the employee in question is a doctor covered by Maintaining High Professional Standards in a Modern NHS (MHPS), there are risks involved in dismissing on the ground of "some other substantial reason", as this may be seen as a shortcut to dismissal when the MHPS contractual process would otherwise apply.

In Lauffer v Barking, Havering and Redbridge University Hospital NHS Trust [2009] EWHC 2360 HC, the trust relied on "some other substantial reason" as the reason for dismissal, following concerns about Dr Lauffer's fitness to practise and competence after a number of clinical incidents. The trust had written to Dr Lauffer inviting him to a disciplinary hearing on the ground of "unprofessional conduct" as it alleged that he had failed to comply with restrictions on his practising. The letter inviting Dr Lauffer to the disciplinary hearing asserted a loss of trust and confidence in him. The disciplinary process became protracted and Dr Lauffer was subsequently dismissed because of the loss of trust and confidence. The trust stressed that this was not a misconduct or a capability dismissal and it relied on "some other substantial reason" as the reason for dismissal.

Dr Lauffer claimed damages and an injunction to restrain what he termed a "purported dismissal", on the basis that the dismissal was invalid due to the trust's failure to follow MHPS, which it was contractually obliged to follow. The High Court upheld Dr Lauffer's claim, concluding that the dismissal had not been for some other substantial reason, but was because of the trust's view of Dr Lauffer's capability.

High-profile cases

Browne v Central Manchester University Hospitals NHSFT

The well-publicised case of Browne v Central Manchester University Hospitals NHSFT ET/2407264/07; ET/2405865/08; and ET/2408501/08 illustrates the possible risks when trust and confidence is given as the reason for disciplinary action. Mr Browne had been with the NHS for his entire career and had worked his way up to a position of divisional director at the trust. There were concerns about his ability to deliver on complex financial and operational agendas. Mr Browne thought that he had been unfairly singled out for blame for financial problems. There was evidence that there had been discussions about an exit strategy for him.

The tribunal found that the trust had started with a conclusion that there had been a loss of trust and confidence in Mr Browne's ability to deliver and that there had been an investigation into the degree of that loss of trust and confidence. The tribunal found the approach of both the disciplinary and appeal panels to be "seriously flawed" as they had failed to consider whether or not the actions of others, including his line manager, had contributed to this loss of trust and confidence. The tribunal found it "astonishing" that this had not been considered.

The tribunal also found that there had been a failure to set out for Mr Browne the nature of the allegations against him and a failure to give him a full opportunity to answer those allegations. It concluded that the disciplinary procedure was a sham and that the decision to dismiss was predetermined. The tribunal awarded Mr Browne just under one million pounds for unfair dismissal and race discrimination.

Royal Cornwall Hospitals NHS Trust v Watkinson

A further high-profile case was Royal Cornwall Hospitals NHS Trust v Watkinson EAT/0378/10. In Watkinson, the EAT held that a former NHS trust chief executive had been automatically unfairly dismissed for making a protected disclosure. The purported reason for dismissal was a breakdown in trust and confidence, connected with a review into the management and governance of the trust, which had been commissioned on the advice of the South West Strategic Health Authority (SHA) and resulted in a report critical of Mr Watkinson. The internal disciplinary appeal panel found that damaged relationships had led to an "irretrievable breakdown in trust and confidence between the Board and [Mr Watkinson] in his ability to lead an organisation in the South West Health Economy". However, Mr Watkinson claimed that the real reason for his dismissal was that he had made a protected disclosure, on 5 August 2008, regarding advice on whether or not the trust was legally required to consult publicly on proposed changes to cancer services.

The tribunal and EAT did not accept that Mr Wilkinson had been dismissed because of a breakdown in trust and confidence, finding instead that he had been dismissed as a result of pressure applied to the trust by the SHA because of Mr Watkinson's protected disclosure.

Handshake Ltd v Summers

Another example of a case in which the employer relied inappropriately on the loss of trust and confidence mantra was Handshake Ltd v Summers EAT 0216/12. The EAT found that the employment tribunal was entitled (on the facts of the case) to find that a disagreement about salary and bonus did not result in a breakdown of trust and confidence so as to amount to "some other substantial reason".

In Handshake, Mr Summers was employed in a small company in the senior management team, which consisted of three people. There was disagreement between the parties as to his entitlement to part of the share capital of Handshake Ltd. Attempts to resolve the disagreement were unsuccessful, which resulted in Mr Summers' solicitors claiming that the relationship had "completely broken down" and become unworkable. Mr Summers was subsequently dismissed. However, the tribunal concluded that the real reason for the dismissal was not a loss of trust and confidence, but a power struggle over the terms of Mr Summers' contract, bonus and shares. It found that if Mr Summers had signed up to new terms, then he would probably not have been dismissed.

On appeal, the EAT upheld the tribunal's decision, observing that it could not be right that an employee, even a senior one, who opens up a debate leading to a dispute over a term of his employment was by that alone acting in breach of the duty to maintain trust and confidence. Although the EAT acknowledged that the manner in which such a dispute is conducted could amount to a breach of trust and confidence, in this case the tribunal did not find anything repudiatory in the way that the debate had been conducted to indicate that trust and confidence had evaporated. The parties were in fact able to continue their work and were simply disputing how much money Mr Summers was entitled to.

The exceptional case

The current approach of the courts is perhaps best illustrated by the comments of Lord Justice Mummery in Leach v Office of Communications (Ofcom) [2012] IRLR 839 CA. Mummery LJ commented on the increasing number of cases in which employers rely on the breakdown of trust and confidence as the reason for dismissal. He recognised that the trust placed by an employer in an employee is at the core of the relationship and that this can break down in a wide spectrum of circumstances. However, he noted that "breakdown of trust is not a mantra that can be mouthed whenever an employer is faced with difficulties in establishing a more conventional conduct reason for dismissal".

Leach was considered by the Court of Appeal to be out of the ordinary as it was a case in which the employer successfully relied on loss trust and confidence. The employee was appointed as an international policy adviser in a job that necessitated regular overseas travel. Prior to commencing the job, he had travelled to Cambodia and been arrested on suspicion of child abuse. He was initially exonerated of any such offences and his employer was at first supportive of him. However, further allegations came to light that suggested that the employee might still be a "continuing threat to children". This was brought to the employer's attention by the Metropolitan police Child Abuse Investigation Command (CAIC). The role of Ofcom, the employer, includes a statutory duty to have regard to the vulnerability of children.

Ofcom questioned the allegations and asked for more information. The CAIC agreed to make a formal limited disclosure, which provided further information of concern to the employer. A disciplinary hearing took place at which Mr Leach had an opportunity to respond at length to each allegation. He was summarily dismissed, the employer finding that the fundamental relationship of trust and confidence had broken down. Mr Leach claimed unfair dismissal. The tribunal found that the dismissal was fair for some other substantial reason and Mr Leach appealed to the EAT.

The EAT's judgment was given by Mr Justice Underhill who said that the EAT had "observed a growing trend among parties to employment litigation to regard the invocation of 'loss of trust and confidence' as an automatic solvent of obligations", it is not, but the EAT upheld the tribunal's decision saying that an employer that receives information from the CAIC or similar body that an employee poses a risk to children is, in principle and subject to certain safeguards, entitled to treat that information as reliable. The employer would not be acting reasonably if it accepted the information uncritically, but this employer had conducted a reasonable investigation.

Mr Leach appealed to the Court of Appeal. He was not able to attend that hearing because he had been convicted and imprisoned in Cambodia for child sex offences. The Court of Appeal upheld the decisions of the employment tribunal and the EAT. However, Mummery LJ said that the duty of trust and confidence that is at the heart of the employment relationship should not be regarded as a "convenient label to stick on any situation in which the employer feels let down by the employee or which the employer can use as a valid reason for dismissal whenever a conduct reason is not available or appropriate".

Conclusion

Case law shows that it can be an uphill struggle to rely successfully on the loss or breakdown of trust and confidence as the reason for dismissal. In all but the most exceptional cases, it is necessary for the employer to dig deeper to find out what has caused the loss of trust and confidence in the employee and whether or not it falls within one of the potentially fair reasons for dismissal under s.98 of the Employment Rights Act 1996. Once that potentially fair reason has been established, a tribunal will look at fairness of process and fairness in all the circumstances of the case. As these cases have shown, trust and confidence will rarely of itself provide a sufficient and fair reason for dismissal.

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