Mutual Trust and Confidence (MTC) in an Employment Contract

sh ard perpetrate and Confidence (MTC) in an Employment ContractSophie CanningMutual trust and confidence (MTC) is a rally marge in implied terms of an job contract.1 MTC is an implied term which dictates that the employer depart non conduct himself in such a way as to destroy or seriously damage the relationship of confidence and trust between the employer and employee.2 The common law development of MTC was influenced by decree,3 statutory procedure for unjust judgement of bagging and in addition had an impact on the way judges view MTC.The foundations for the implied term of MTC were laid down by Addis v. Gramoph i Co. Ltd4 which set out that in unconventional fire cases, at that place was no compensation in common law action for 1) the manner of pink slip, 2) the injured feelings, or 3) losses sustained from post sackful.5 The notion of MTC was not established in this case, but this case later helped explore the implied term of MTC. Courtaulds Northern Textiles L td v Andrew6 gave MTC a narrative formulation.7 MTC also arose out unfair emission and constructive dismissal acquires, where the rubricant wished to establish constructive dismissal and had to show in that respect had been a breach of contract.8 However, this could not always been proved and on that pointfore there was a shift and people started arguing the employers behaviour undermined the employment relationship.9 The term of MTC was formally recognised in Malik v. BCCI,10 where it was described it as a portmanteau responsibleness by Lord Nicholls11 and also opened up the opportunity to affirm remedy for undermining MTC.12 Malik13 ultimately contradicts the third limb in Addis14 as it allowed compensation for stigma damage. The imprimatur limb from Addis15 was also challenged in Gogay V Hertfordshire County16 when a care proletarian was suspended come uping accusations of child abuse and, from this, suffered from a psychiatric illness. The care worker was gifted dama ges for the breach of MTC going against Addis17 which stated there was no remedy at common law for injured feelings.However, both Addis18 and Malik19 arose from claims during the course of employment. The question arises whether there can be a common law remedy for at the time of the dismissal. This is answered in Johnson v Unisys20 where it was identified that in the common law of wrongful dismissal, there cannot be a remedy for a breach of MTC at the time of dismissal. This rule was fashioned into the Johnson Exclusion Zone which is where common law claims found on a breach of MTC were pre-empted by the statutory claim for unfair dismissal.21 Some academics have showed contention towards the Johnson Exclusion Zone. Collins highlights that, in sham to unfair dismissal claims, the exclusion govern cannot be manoeuvred around, if the claim can be met by the statutory law of unfair dismissal or if the claim cannot be met by statutory law, the exclusion zone still applies.22It was a lso stated in Edwards v Chesterfield Royal Hospital NHS invertebrate foot Trust23 that the Johnson exclusion area has been fertile of anomalies and difficulties.24Furthermore, more recent cases such as Bournemouth University Higher Education Corp v Buckland 25 and Tullett Prebon Plc v BGC Brokers LP26 have confirmed how fundamental MTC is, especially in the eyeball of the court.27Buckland28 demonstrated that apart from Johnson,29 the statutory context of MTC cannot be invoked to dilute the impact of the common law regime.30 Furthermore other cases have developed the law, in regard to constructive dismissal cases. Leeds Dental Team Ltd v Rose,31 in consideration of Tullett,32 required Tribunals to endeavour to find the employers intention whether they had the intention to act in such a way as to destroy MTC with the intention to permit the employee to terminate the contract.33The values of public law have also had a role in the emergence of MTC. MTC aims to guard against an abuse of power by the employer and protects the employee from an imbalance of power and an undermining of the relationship, mirroring the public law principles of regulating the power of public bodies. Brodie highlights this, underpinning that the most notable impacts of the implied obligation has been the way in which it has restricted an employers arbitrary powers public law also serves to regulate the powers and discretions of public bodies.34 MTC also mirrors the values of public law as, as mulish in Johnson,35 the employers power to dismiss is unfettered by implied duty. The rationale for this, as highlighted by Barmes, is that judicial imposition of fetters on dismissal powers would unconstitutionally undermine the legislative prohibition on unfair dismissal it would give a common law cause of action to claimants who had been excluded by Parliament from eligibility to bring a statutory claim.36 Again, this stops an imbalance of power and an autocratic relationship between employer and employee. Natural justice also plays a role in MTC. Natural justice demands honor and non-bias decisions and is a common law rule.37 Natural justice fits in with MTC as there is an obligation of MTC that renders illegitimate decisions and behaviour adjudged to be unacceptable in the contemporary workplace,38 trying to create a fair balance between the employers and employees. However the notion of natural justice within MTC is not entirely favoured. Neuberger stated that he does not consider it right to import the rules of natural justice, which are connected with judicial decisions and any(prenominal) administrative decisions, into the purely contractual relationship of employer and employee.39Although the notion of MTC is one which is instrumental to the employment contract, it does have limitations. Firstly, MTC is arguably too broad, it encompasses too many obligations. MTC was described as being an overarching obligation implied by law as an accompanying of the contrac t of employment.40 However academics such as Cabrelli disagree with this statement and postulates that there is no evidence for the emergence of the implied duty of rough-cut trust and confidence as an umbrella principle.41 Conversely, the broad temper of MTC could be considered a positive aspect. Irving maintains that MTC is a flexible and fundamental concept, is desirely to retain its importance whilst evolving further with the changing nature of employment relationships.42 The flexible of this term means it can change with and adhere to the needs of society. The Court of Appeal has sought to reduce the extensiveness of MTC.43 In Johnson44 injury arising dismissal was removed the overarching feature of MTC, although this did not extinguish its input when assessing damages.45 Despite that this was removed from the extensive list of things MTC encompasses, the removal of this is also a limitation. The principal that came from this is called the Johnson exclusion zone and is a lim itation as it does not allow employees to recover damages for injuries sustained from the way they were dismissed even if it rongful or unfair. Lord Nicholls identified collar problems from this 1) a duplication of proceedings, one for common law action and the other for statutory action, 2) the existence of a boundary ancestry means that in some cases an ongoing course of conduct may have to be split, 3) boundary lines may cause strange results.46 MTC, and the search for a boundary line in the Johnson exclusion zone, has also created tension between the common law and the statutory procedure. This was highlight in Eastwood,47 where it was underpinned that the practical consequences of the boundary between common law and statutory rights and remedies are unsatis accompanimentory and merit urgent attention by the Government and the legislature.48There seems to be similar view from the judiciary concerning MTC. Lord Hoffman underpins that the statutory abstract of unfair dismissal does not allow parallel law development, as it would agonistic to Parliaments intention, and therefore further development of MTC would be impossible.49 Brodie highlights that the view of the judiciary is that the abstract mechanism for regulation is provided by the law of unfair dismissal hence restricting the proper ambit of the term of mutual trust and confidence.50 Brodie also underpins that not allowing statutory compensation limits to circumvent Parliaments intention has a wider public interest, and is not just about equitable remedies.51 So on this it seems that the courts view on MTC is that it should assert well within the ambit of Parliaments intentions, heretofore in doing so, could prohibit the development of MTC.To conclude, it is therefore clear that the evolution of MTC has been influence by unfair dismissal legislation and Parliaments intention and has ties with Public Law values such as natural justice. The Johnson Exclusion Clause has brought with it a lot of li mitations as well as the statutory procedures which limit the common law remedies and arguably MTC from further developing fully. Furthermore, the judges seem to be more concerned with providing a remedy in line with Parliaments intention rather than providing a common law remedy that is equitable which also could arguably be limiting the development of MTC fully and properly.Words 1479Bibliography firsthand SourcesCasesAddis v. Gramophone Co. Ltd. 1909 A.C. 488Bournemouth University Higher Education Corp v Buckland 2010 EWCA Civ 121 2011 Q.B. 323Courtaulds Northern Textiles Ltd v Andrew 1979 IRLR 84Eastwood v Magnox Electric Plc 2004 UKHL 35Edwards v Chesterfield Royal Hospital NHS Foundation Trust 2011 UKSC 58Gogay V Hertfordshire County 2000 EWCA Civ 228 2000 IRLR 703Johnson v Unisys 2003 1 AC 518Leeds Dental Team Ltd v Rose 2014 I.C.R. 94Malik v. BCCI 1997 I.R.L.R. 462Mclory and Others v Post Office 1993 1 every ER 457Tullett Prebon Plc v BGC Brokers LP 2011 EWCA Civ 131 2011 I .R.L.R. 420Woods v WM gondola Services 1981 ICR 666 polityEmployment Rights Act 1996Secondary SourcesBooksPitt, G, Pitts Employment Law (2016, tenth ed, bouquet Maxwell),Samuels, H and Webley, L, Public Law Texts, Cases, and Materials (2015, OUP) 3rd EdJournalsBarmes, L, Common Law Implied Terms And Behavioural Standards At Work 2007 ILJ 35Barnard, C Cherries one turn or two? 2006 CLJUK 27Barnard, C and Merrett, L, Winners And Losers Edwards and The Unfair Law Of Dismissal 2013 C.L.J 313Brodie, D, Legal coherence and the employment revolution 2001 Law Quarterly Review 604Brodie, D, Mutual Trust And Confidence Catalysts, Constraints And Commonality 2008 ILJ 329Brodie, D, Mutual Trust And Confidence Further Clarification 2011 Employment Law Bulletin 2Cabrelli, D, The Implied Duty of Mutual Trust and Confidence An Emerging Overarching Principle? (2005, ILJ Vol 34)Collins, H, Compensation For Dismissal In Search Of Principle 2012 ILJ 208Irving, D, The role and development of mutual trust and confidence as an implied term of the contract of employment 2008 Coventry Law Journal 22Julies Enterprise Limiteds (JEL) company handbook gave the company the right to change the contents of the handbook and cut in new policies, depending on the business. However, generally there cannot be a variation of terms unilaterally. Lord Justice Asquith stated on the matter of unilateral changes, that an impossible repudiation is a thing writ in water52 underpinning the need for a bilateral variation of terms. JELs right to change contents of the handbook and policies is analogous to Bateman v Asda53where Asda created an express term in the employees contracts that stated they reserved the right to change and amend their handbook unilaterally. Both the courts agreed that Asda could reserve the right to change the handbook unilaterally as long as the term is clear and it is not illogical manner so farther as to breach the term of mutual trust and confidence. Therefore following this, JEL has the right to amend the handbook, however changing the handbook to incorporate random full body searches could be seen as unreasonable and a breach of mutual trust and confidence.S95 of the Employment Rights Act 199654 (ERA) underpins the nature to which someone can be dismissed. An employee can be dismissed with or without pick up if the contract has been terminated by the employer.55 Commonly the dismissal is not effective until has been communicated by the employer and the employee had acknowledged it, as confirmed in Gisda Cyf v Barratt.56The verbal dismissal from Jeremy can be seen as being communicated and therefore it can be said that Lizzie acknowledged it. The dismissal must also be clear and explicit. If it is indefinite the courts must enquire as to what the reasonable man would understand as a dismissal. In Futty v D and D Brekkes Ltd57the employer told the claimant if you do not like the job, you can fuck off and this was construed by the claimant as bei ng equivocal to a dismissal. However, this was not construed as a dismissal but as a resignation as the complainant found another job.It also has to be established whether Lizzie can claim for unfair or wrongful dismissal. Wrongful dismissal is concerned with a dismissal in breach of contract. There are two conditions that need to be fulfilled to have a successful claim 1) there was a termination of a contract without or with inadequate let out and 2) the employer was not justified in doing so.58 On the other hand, unfair dismissal is concerned with a dismissal that is unfair and is statutory. Under the ERA it states that an employee has the right not to be unfairly dismissed by his employer.59 To claim for unfair dismissal, there must be a qualifying period of employment of at least one year, as her employment is prior to 6 April 2012.60 As Jeremy had no good reason for dismissing Lizzie, or followed a disciplinary process, it can be seen as unfair.61 There are aspects of Lizzies dismissal that were wrongful and unfair.Generally, the law on references is that there is no legal obligation to provide a reference but if one is given it must be fair.62 If Lizzie were to think the reference was unfair, she could claim for damages upon proving the unfair reference caused her to suffer a loss.63 Jeremy stating not to bother asking for a reference was therefore neither unfair nor wrongful as Jeremy does not have to provide one.At common law, no damages can be awarded for matters that arise from it such as psychiatric injury. Lizzie has suffered panic attacks and depression since her dismissal. This is declarative mood of wrongful dismissal. However, the courts cannot award damages in regard to psychiatric injuries that arise as a result of the dismissal, as per Johnson v Unisys.64In this, the claimant had won a claim for unfair dismissal and tried to claim for wrongful dismissal, as the claimant had suffered a mental breakdown as a result of the way he was dismisse d. However, the legal age verdict was that there could be no claim as the judges could not justify developing a common law remedy to employees who suffered from psychiatric illnesses as a result of the way they were dismissed. Johnson65indicates that the judges are not prepared to extend the common law of wrongful dismissal in a way which would extend beyond that of unfair dismissal legislation.66 However, as per Eastwood v Magnox Electric Plc67 Lizzie could have claimed if the psychiatric injury arose before the dismissal but this is not the case, so it is unlikely she could claim for psychiatric injury.Additionally, in Lizzies employment contract, it was an express term that she would receive 3 months posting. However Jeremy did not satisfy this and terminated her employment without notice. Under S86 ERA there is a statutory minimum notice period.68 For each year of employment, there must be one week of notice if the employment is continuous and more than two years but less than twelve.69 Therefore, under this statutory minimum, Lizzie should be entitled to at least five weeks notice. However, Lizzies notice period was contractually 3 months and as she has not received this, there has been a breach of contract. Therefore it could be said that Lizzies dismissal was in fact wrongful as this is a breach of contract. Generally, there is no duty to give notice when the employee is in fundamental breach of contract. This is shown in Pepper v Webb70 where the employees refusal to follow instructions and continued to be insolent was held to be a breach of implied duty and therefore the dismissal was warranted, despite there being no notice.Lizzie should claim for unfair dismissal. There are three types of remedies, in regard to unfair dismissal reinstatement, re-engagement and compensation. Reinstatement is governed under S114 ERA and means an employer has to treat the complainant as if he had not been dismissed71 effectively when the employee goes back to their j ob as if they had not been unfairly dismissed. However, it is unlikely she would want this. Moreover, re-engagement is governed under S115 ERA which states that the complainant will go back to the employer but to a different job.72 Again, it is doubtful she would want this. Additionally, compensation is governed by sections 118 to 124 ERA. S119 underpins the basic award received 1) Half weeks pay for all year of employment when the claimant is aged under 22, 2) Weeks pay for work between 22-40 and 3) Week and a half pay for every year over 41.73 The Compensatory award is governed by S113 and conditions that the court must give an amount that is equitable74 and includes losses of earnings and any future loss, subject to aggravating circumstances, such as if the complainant had suffer to their dismissal in any way.75 Damages are subject to deductions one of the most common deductions is the Polkey Deductions.76 This deduction occurs when there has been an unfair dismissal as the emp loyer has failed to follow the correct procedure.77 If the claimant would have been dismissed anyway, the compensation would be reduced as to the likelihood as a percentage deduction.78If Lizzie claims for unfair dismissal, it would be unlikely she could claim for wrongful as well. However, if she wanted to claim for wrongful instead, as it is concerned with the breach of a contract, the purpose of the remedy would to put the claimant back in a position they would have been before the breach. Damages in regard to the inability to comply with the express notice period can only stretch as far as the money earnt in that period of employment if notice had been given. This is highlighted in Focsa Services (UK) Ltd v. Birkett79where Justice Clark stated that the fact was that Mr Birkett was dismissed. In so far as he did not receive his full notice, he is generally entitled to damages to reflect the pay during the notice period and no more.80 Lizzie did not receive a notice, even though i t was contractual that she should have one and therefore Lizzie could claim for pay she would receive in those three months if she received notice. When the courts are analysing the amount to give in damages, the court also have to consider other relevant factors such as bonuses. Lizzie, as part of remuneration, received a discretionary bonus and received this bonus ordinarily every year, bar last year. Generally, there can be a claim for bonuses if they are contractual, however as Lizzies was discretionary there is no duty to give a bonus if not contractual. Moreover, the courts aim to return the employee to the original position before the dismissal. This is beef up in Lavarack v Woods of Colchester81where an employee had been wrongfully dismissed and did not receive a bonus after dismissal, despite being subject to sporadic discretionary bonuses, as the employers had cut bonuses and raised the wage. The Court of Appeal held that the employers only had to fulfil the contractual o bligation as everything else, including bonuses and raised pay, was discretionary.Words 1520Total Words 2999Bibliography principal(a) SourcesCasesBateman v Asda 2010 IRLR 370Eastwood v Magnox Electric Plc McCabe v Cornwall County Council 2005 1 AC 503Focsa Services (UK) Ltd v. Birkett 1996 IRLR 325Futty v D and D Brekkes Ltd 1974 IRLR 130Gisda Cyf v Barratt 2010 UKSC 41 2010 4 All E.R. 851Howard v Pickford Tool Co 1951 1 KB 417, 421 (Asquith LJ)Johnson v Unisys 2001 UKHL 13 2003 1 A.C. 518Lavarack v Woods of Colchester 1967 1 QB 278Pepper v Webb 1969 1 W.L.R. 514LegislationEmployment Rights Act 1996Secondary SourcesBooksGweneth Pitt, Pitts Employment Law (Sweet Maxwell, 2016) 10th edWebsitesACAS, References workers rights (gov.uk, 2016) accessed 20 December 2016ACAS Understanding the Polkey deduction (ACAS, 2013) accessed 23 December 2016Gov, Dismissal Your Rights (gov.uk, 2016) accessed 16 January 2017Gov, Dismissal Your Rights (gov.uk, 2016) accessed 16 January 2017Working r eputationsDeakin, S, The Contract Of Employment A Study In Legal Evolution (2001) ESRC Centre for Business Research, University of Cambridge Working Paper No. 203, 33 accessed 19 December 20161 David Cabrelli, The Implied Duty of Mutual Trust and Confidence An Emerging Overarching Principle? 2005 Industrial Law Journal, Vol 34, 2842 Woods v WM Car Services 1981 ICR 666 Malik v. BCCI 1997 I.R.L.R. 4623 Employment Rights Act 19964 Addis v. Gramophone Co. Ltd. 1909 A.C. 4885 Ibid (Loreburn L.C.) Malik v. BCCI 1997 I.R.L.R. 462 (Lord Nicholls)6 1979 IRLR 847 Lizzie Barmes, Common Law Implied Terms And Behavioural Standards At Work 2007 ILJ 358 Gweneth Pitt, Pitts Employment Law (2016, 10th ed, Sweet Maxwell), 15549 ibid10 Malik v. BCCI 1997 I.R.L.R. 46211 Catherine Barnard, Cherries one bite or two? 2006 CLJUK 2712 Gweneth Pitt, Pitts Employment Law (2016, 10th ed, Sweet Maxwell)13 Malik v. BCCI 1997 I.R.L.R. 46214 Addis v. Gramophone Co. Ltd. 1909 A.C. 48815 ibid16 2000 EWCA Civ 228 2000 IRLR 70317 Addis v. Gramophone Co. Ltd. 1909 A.C. 48818 ibid19 Malik v. BCCI 1997 I.R.L.R. 46220 Johnson v Unisys 2003 1 AC 51821 Catherine Barnard and Louise Merrett, Winners And Losers Edwards and The Unfair Law Of Dismissal 2013 C.L.J 31322 Hugh Collins, Compensation For Dismissal In Search Of Principle 2012 ILJ 208