The Implied Terms of Trust and Confidence


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Within the workplace there are express contractual obligations such as National Minimum Wage (NMW) and protection against discrimination and then there are terms which are implied within a contract.

This includes the implied terms of trust and confidence. The terms have their origins within common law, which stemmed from the duty of cooperation, and gained popularity through constructive dismissal under the Industrial Relations Act 1971.

You may be thinking that this sounds like a tricky area to navigate right now, but read on and in no time at all you’ll know:

  • The meaning of the implied terms of trust and confidence
  • Examples of legal cases that involved these terms
  • Potential breaches of these terms
  • The last straw in employment context

What are the implied terms of trust and confidence?

Within an employee contract there is an implied agreement that neither party, whether employee or employer, will breach trust and confidence, unless there is a justifiable reason for doing so.

This all came under the microscope in 1997, with the Malik v Bank of Credit and Commerce International (BCCI) IRLR 462 case. Here, the impact that BCCI’s actions (behaving in a corrupt and dishonest manner) had on its employees was considered. Following this, the House of Lords (HoL) went on to implicitly recognise the implied terms of trust and confidence.

Through this case it was also determined that the implied terms of trust and confidence was a mutual duty. This meant that it would apply to the employer and the employee. At the time, in his judgement in the case, Lord Steyn determined that the term was a “workable principle in practice”.

That being said, the implied terms’ meaning was first articulated back in 1981, in the Woods v W M Car Services Peterborough Limited ICR 666 case. There, the employment appeal tribunal outlined: “It is clearly established that there is implied in a contract of employment a term that employers will not without reasonable or proper cause, [my emphasis] conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee”.

Breaching the implied terms of trust and confidence as an employer

There are numerous ways that an employer can breach the implied trust and confidence of a contract. A common and sometimes entirely unintentional breach, may arise if the employer ignores the grievances of an employee.

This could be a consequence of the business experiencing a busy period, or perhaps the employer believes that the grievance is minor. Unfortunately, either of these situations would classify as a breach as they are not justifiable reasons.It is also likely that these reasons violate the company’s internal policy.

Another way in which an employer could breach the implied terms of trust and confidence, is through violating the internal disciplinary procedure. This could be through making the decision to suspend an employee over misconduct allegations, without thoroughly investigating said allegations. Equally, accusing an employee of misconduct without sufficient evidence would also be considered a breach.

If an employer subjects their employees to excessive workloads, or suddenly makes alterations to their working arrangements, be this a change in location or shift pattern, this could also count as a breach. Moreover, if an employer does not take into consideration an employee’s family commitments, and consequently causes them psychiatric harm, this would also be a breach.

Finally, if an employer is not transparent around bonuses and benefits, to the point where an employee is misled, an employer could get in trouble here too.

Breaching the implied terms of trust and confidence as an employee

As outlined above, it’s not just employers that can breach the implied terms of trust and confidence, employees can too.

While an employee has the right to raise any legitimate concerns they have about the company they work for, excessive use of the grievance procedure to the point of disruption can breach the implied terms of their contract.

Additionally, a breach would also occur if an employee brings damage to the company. This applies whether an employee has caused damage to the company’s reputation, or the company’s property through misuse.

Meanwhile, if an employee leaves a company, and then attempts to recruit clients from their previous employer, this is also considered a breach.

Examples within legal cases

Determining when the implied terms of a contract have been breached, can be quite difficult. There are so many nuances involved in these kinds of cases, and as a result they are not always as straightforward as those involved would like them to be.

To make things a little easier to understand, below are some examples of cases where a breach of the implied terms of trust and confidence occurred.

Back in 2003, in the Horkulak v Cantor Fitzgerald case, the Court of Appeal held that if an employer threatens their employee with dismissal as a means of intimidation, this qualifies as a breach of the implied terms of trust and confidence.

Later in 2010, the Adamson v Mitchells & Butler Retail Ltd case dealt with a situation where a manager was caught on CCTV being pushed around in a wheelie bin by a female colleague. The manager then proceeded to fall out of the wheelie bin, which caused damage to his employer’s property.The employment tribunal determined that his dismissal was fair, because his actions had caused his employer to lose trust and confidence in him.

Meanwhile, in the 2013 case of Blackburn v Aldi Stores Ltd, it was determined by the employment appeal tribunal that failure to provide an impartial grievance appeal process could breach the implied terms of trust and confidence. Consequently, this served as grounds for a constructive dismissal.

The “final straw” in an employment context

The “final straw” in an employment context, can be defined in two ways. Either, it refers to:

  • A serious breach of an implied contractual term
  • Or, it refers to a less serious breach, in a long line of other breaches that has weakened an employee’s trust and confidence in their employer.

This can lead to a repudiatory breach of contract, and could potentially allow the employee to end their contract and claim constructive dismissal. In order to lodge a claim of constructive dismissal, the employee would have to file their claim within three months of the date of their contract’s termination. Additionally, the employee would be required to have worked for their employer for a minimum of two years.

Final thoughts

So, there you have it, the complexities of the implied terms of trust and confidence explained in an easily digestible way.

Understandably, this can be an area that is both confusing and stressful, but if you stick to the straight and narrow, whether you’re an employer or an employee, you shouldn’t be faced with any problems.

Article Created By Madaline Dunn

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