Breaches of trust, confidence in the employment relationship

COURTNEY MCNISH

As so many of you may be aware, a contract of employment is a unique agreement. Indeed, when parties enter into this contract, many individuals are unaware of all the terms and conditions contained therein. This truism may apply to both the intended employer as well as the candidate employee.

If you are puzzled by this reality, you are not alone, as all contracts of employment contain both written and unwritten terms and conditions. These unwritten terms and conditions are more legally defined as implied terms, with which this article is concerned.

The implied terms of a contract of employment are just as important as the expressed terms and weights equally for both the employee and employer.

One of the most troublesome and controversial of these implied terms is the principle of mutual trust and confidence.

What are the rights and obligations that this principle requires parties to observe and honour?

There have been many judgments from the English jurisprudence as well as our Industrial Court with regard to the importance of trust between employer and employee, and yes, as previously said, the term applies to both parties in the relationship.

The term came from case law and obliges both parties not to act in any way that is calculated to, or likely to, breach trust and confidence without which it impossible to sustain the employment relationship. The principle is based on a rational concept of behavioural expectations.

An employee should not be expected to work in an environment where:

• Employees are constantly making unfounded or abusive comments about him/her without any intervention from the employer

• It is made impossible for him/her to do their job, by for example, by giving them too much work or not responding to their requests for help with their workload

• Disciplinary actions are unfairly taken against the employee

• Exercising discretion (for example to award a bonus) in bad faith

• Using (or permitting others to use) foul, offensive or discriminatory language in the workplace, without intervention.

The examples above are based on the premise which supports the expectations that the parties involved in an employment contract ought not to act in a manner that undermines the relationship. This duty to act and behave consistently with expected standards was first established by the House of Lords in its decision in Malik v BCCI [1997] IRLR 462.

Malik was unable to obtain employment after his company (BBCI) crashed owing to its international criminal conduct. He sued and it was the unanimous view of the Lords that: “On the premise that BCCI had operated its business in that manner (criminal conduct), BCCI was in breach of that implied term trust and confidence, and the employees could, in principle, recover damages for their losses caused by the stigma resulting from their association with BCCI.”

As a direct result, this implied term became incorporated in all contracts of employment. Some labour-law scholars now talk of the duty of good faith as an attachment to trust and confidence, as opposed to the more established implied duty of fidelity.

The employee is also expected to behave honestly, carrying out his job with the proper application of diligence and in the interest of the employer and the other employees. Whenever there is a question as to the conduct of an employee which could lead to a determination of loss of trust and confidence, it should be asked:

1. Whether there was reasonable or proper cause for the conduct

2. Was the conduct intentional, calculated, intended to cause harm and likely damage the employment relationship or tarnish the employer’s reputation?

3. Was the position that the employee occupied one where trust was a key factor?

I also looked at two leading judgments emanating from our Industrial Court, which were delivered 16 years apart.

Although their determinations appear contradictory, I have grave misgivings about their conclusions. It is clear that in both cases the respective quorums appreciated and understood the trust and confidence principle as a concept. My concerns, however, lie in the application of the concept in both these cases.

In TD 370/1997 BIGWU vs UTC, His Honour Mr Khan offered a view that “the expression of loss of confidence is a vague and uncertain concept. It is wholly inappropriate to use the expression in modern good industrial practice.”

In my view, there is nothing vague or uncertain about the concept, which is rooted in the principle of behavioural expectations, as each party is expected to behave in an appropriate manner. Therefore, every issue that gives rise to a determination of loss of trust and confidence will be case-specific and based entirely on the merits.

I hold therefore that it is most appropriate to use the expression once a determination is arrived at based on an objective assessment of the behaviour of either party.

On the other hand, in TD 566/2013 OWTU vs Columbus Communication Trinidad Ltd, the court examined the letter of termination and observed that it mentioned that the company had lost confidence in the worker’s ability to do her job. The court went on to state that the worker was not asked to answer this charge, and this represented a breach of good industrial relations practice.

My challenge with this dicta is, if the concept of loss of trust and confidence is predicated on some preceding act by either party, is it therefore not logical that the charge that the employee must answer was naturally related to that offending conduct? I therefore hold the view that a breach or loss of trust and confidence on its own cannot be a charge for the employee to answer; it is really a determination arrived at as a result of a party being held culpable for some preceding offensive conduct.

Given the court’s view, I advise employers that a cautious approach should be adopted concerning applying this challenging implied term. Accordingly, robust advice should be sought before terminating an employee for this reason.