Employment Law News

Employer tries to dismiss employee over a disagreement about money

In Handshake Ltd v Summers, the Employment Appeal Tribunal found that a breakdown in trust and confidence between an employer and employee, did not entitle the employer to rely on “some other substantial reason” to dismiss the employee.

Law

In employment law, there are potentially five reasons constituting a fair dismissal. These are (1) conduct; (2) capability; (3) redundancy; (4) illegality; and (5) some other substantial reason. If the employer demonstrates a potentially fair reason, it must then show that it followed a fair procedure and the dismissal was fair in all the circumstances.

Facts

Following a dispute between the parties regarding Mr Summers’ entitlement to company shares, his solicitors wrote a letter to Handshake Ltd stating that Mr Summers had “lost all trust and confidence in his employer”. Handshake Ltd subsequently dismissed Mr Summers arguing there had been an irreparable breakdown in the working relationship. Mr Summers brought a claim for unfair dismissal.

The Employment Appeal Tribunal agreed that Mr Summers had been unfairly dismissed and concluded that the real reason for the dismissal was not a loss of trust and confidence but the “power struggle” relating to Mr Summers’s remuneration. This case highlights to employers that “some other substantial reason” cannot be used as a smokescreen to justify a dismissal that does not fit into one of the other fair reasons for dismissal.