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Employment Law

Legal guidance - compliance - software

06 SEP 2012

Unfair Dismissal, disclosures by third parties and mutual trust and confidence: commercial sense?

Julian Allsop, Guildhall Chambers

In the recent decision of Leach v Office of Communications (Ofcom) [2012] EWCA Civ 959, the Court of Appeal upheld as fair the dismissal of Mr. Leach (not my colleague in the Employment Team at Guildhall Chambers or any relation) for some other substantial reason (s.98(1)(b) ERA 1996) as a result of a breakdown of trust and confidence due to serious but unsubstantiated allegations that he had been involved in child sex abuse in Cambodia. 

The dilemma facing Ofcom was stark. They had received information from an apparently reliable source (the Metropolitan Police Child Abuse Investigation Command ‘CAIC') as to Mr. Leach's alleged activities in Cambodia. It was considered that Mr. Leach had not been candid about his situation to Ofcom, including at the disciplinary hearing itself. If Ofcom continued to employ Mr. Leach in a senior level which required some overseas travel and the allegations were substantiated, Ofcom could suffer serious reputational damage. On the other hand, the allegations were unproven and dismissing Mr. Leach on that basis could amount to a grave injustice. Mr. Leach's colleagues would not have treated him substantially differently had his employment continued. In addition, Mr. Leach's role did not involve contact with children, although part of Ofcom's remit involves the protection of the interests of children.

Ofcom chose to summarily dismiss Mr. Leach. The employment tribunal dismissed his subsequent unfair dismissal claim. In essence, Ofcom were entitled to proceed on the basis that the information was reliable and that justified it in no longer having trust and confidence in Mr. Leach.

In upholding the fairness of this dismissal (and the dismissal of Mr. Leach's appeal by the Employment Appeal Tribunal (EAT) (UKEAT/0106/09/SM), whose judgment was fully endorsed by Lord Justice Mummery), the Court of Appeal set out some general guidance for employers dealing with cases where serious allegations are brought to their attention by third party informants.

Firstly, the case underscored the need for an employer who is faced with information of this sort from a third party to assess the reliability of that information, as well as the integrity of the informant body and the robustness of the safeguards of that body in handling and disseminating information. 

Moreover, as was noted by Underhill J at paragraph 27 of his judgment in the EAT, the focus of the Tribunal's inquiry has to be on how the employer should have reasonably acted when the disclosure was made to him as required by s.98(4) ERA 1996. As was illustrated by the case of Henderson v Connect (South Tyneside) Limited (UKEAT/0209/09) a case in which a bus driver had been the subject of allegations of child abuse which he had denied and which the police had declined to prosecute, his dismissal at the behest of the local Council was fair since the employer had done all it could to persuade the Council to change its stance and it had considered alternatives to dismissal, whilst the overall situation might be unjust, in the microcosm of s.98(4), dismissal in these circumstances could be fair.

Further, the EAT stated (paragraph 28 of its judgment) that an employer who received information from CAIC or a similar body under an official disclosure regime to the effect that an employee poses a risk to children must in principle and subject to certain safeguards, be entitled to treat that information as reliable, by contrast (paragraph 29 of the EAT's judgment) an employer who takes an uncritical view of the information disclosed to him will not be acting reasonably.

Key to Ofcom's case was the existence of those safeguards, namely the fact that it did not react in a ‘knee jerk' fashion to the limited and confidential disclosure of a police assessment that Mr. Leach posed a continuing risk or threat to children. It sought clarification, confirmation and some further disclosure before holding an internal disciplinary hearing at which Mr. Leach was afforded an opportunity to answer the allegations against him. It was therefore entitled to form the view that in the round, there was a breakdown in trust and confidence in Mr. Leach.

In addition, the employer should consider the likely effect of the disclosure from the third party and whether there was cogent evidence of a pressing need for disclosure to the employer. This will tend to elide with the consideration highlighted by the EAT under s.98(4)(a) ERA 1996 of whether even if Ofcom were entitled to treat the disclosed information as reliable and thus to treat Mr. Leach as posing a risk to children, whether the risk posed by an employee to children constituted a sufficient reason for dismissal.

In Mr. Leach's case, it was not the risk to children that was the catalyst for Ofcom taking action against him, but rather the significant risk to its public reputation if the allegations were established, and it had not taken action in the light of its knowledge of the matter. In an extreme case such as this, it was reasonable to conclude that trust and confidence had been broken and as no other alternatives were available, dismissal was justified.

Finally, it was underlined that the mutual duty of trust and confidence is not a convenient label that an employer can put on any situation in which it feels let down by the employee, or use as a valid reason for dismissal in circumstances in which a conduct reason is not readily available. Whilst the relevant circumstances in which SOSR on this basis will inevitably vary, the need for a critical and thorough appraisal of the situation at hand (as far as is practicable) is a fundamental constant if a fair dismissal is to take place. It is necessary in every case to identify why the disclosure is said to have made it impossible to continue the employment.


"SOSR" has been a fairly malleable residual category of admissible reason over the years. Its reach can extend to private conduct which is inconsistent with the a key aspect of the employee's job (see for instance, Abiaefo v Enfield Community Care NHS Trust EAT/152/96 (where the employee, a Health Visitor, was dismissed following what was found to be the excessive corporal punishment of her child), as well as the potential damage to commercial reputation that is anticipated by the employer if an employee is retained contrary to a key client's wishes, see for instance Scott Packing & Warehousing Co. Ltd v Paterson [1978] IRLR 166. 

Where Leach v Ofcom treads new ground is that it permits summary dismissal on the basis of the possibility of damage to reputational risk alone under the aegis of a breakdown in mutual trust and confidence. Whilst at first blush this is a surprising conclusion and at odds with contractual orthodoxy (which is a matter for another time), by placing an emphasis on the employer having to establish as far as practicable the probity of the disclosure and the lack of alternatives to dismissal, it strikes the correct balance between the statutory rights of an employee to procedural and substantive fairness and the legitimate interests of the employer. If the employee has suffered an injustice by the disclosure, he will have the possibility of redress elsewhere against the informant. At the end of the day, it must be right that the employer does not bear an untrammelled responsibility for protecting the employee's substantive rights at the expense of its own commercial interests. The interpretation of s.98 ERA 1996 propounded by this case, which places an emphasis on the central question of whether it was reasonable for the employer to take the course that it did, should be applauded as it achieves that aim.

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