UK: Loss Of Trust And Confidence Not 'Some Other Substantial Reason'

Loss Of Trust And Confidence Not 'Some Other Substantial Reason'

The case of Handshake Ltd v Summers illustrates the difficulties of relying on a breakdown of trust and confidence to justify a dismissal on the grounds of 'some other substantial reason' under the Employment Rights Act 1996.

Mr Summers was recruited as a senior manager for Handshake Ltd in 2003. A dispute arose as to the calculation of his profit share and bonus. From 2006 onwards, the company also attempted unsuccessfully to formalise the terms of his service agreement. The negotiations became contentious and, in 2009, Mr Summers' solicitors wrote to the company claiming that he there had been a breakdown in their working relationship amounting to a complete loss of trust and confidence.

The Employment Tribunal held that Mr Summers had been unfairly dismissed. The real reason for dismissal was not a loss of trust and confidence, but the power struggle over his pay and other terms of employment. It also held that Mr Summers was partly responsible for his dismissal and reduced his compensatory award by 40%. This decision was upheld by the EAT which confirmed that, whilst a breakdown in trust and confidence can amount to some other substantial reason, it did not in this case. Although the relationship between Mr Summers and the company had become confrontational, there was no evidence that they were unable to work together.

The EAT stressed in this case that difficulties in a working relationship will not justify dismissal where the parties are simply in dispute over terms of employment, particularly where there are no other contributing factors. This case is also consistent with views expressed by the courts previously that a breakdown in trust and confidence should not be used as a convenient label in situations where an employer cannot easily rely on one of the other fair reasons for dismissal.

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