18th April 2014

Practise What You Preach!

James Cotier/Photodisc/Getty Images
James Cotier/Photodisc/Getty Images

The recent case of IBM UK Holdings Ltd & Anor v Dalgleish & Others provided an interesting consideration of the implied term of mutual trust and confidence in an employment contract.

In light of the decision, employers should be aware that if they claim to maintain high ethical standards then the courts will consider this when determining any subsequent dispute between the parties.  This case essentially means that a court can determine any dispute with reference to the implied (unwritten) duty of mutual trust and confidence.

In the case, IBM wished to alter its pension arrangements and much of the case is about pension law. However, the Judge also considered whether IBM was in breach of the implied term of mutual trust and confidence by failing to consult properly with its employees. The Judge held that the employees were entitled to expect a consultation process which was in accordance with the company’s statements of principle which were based on honesty and clear communication. Mr Justice Warren held that IBM had not behaved openly and transparently and, in the context of IBM’s statements of principle, this was a breach of the implied term of trust and confidence.

This demonstrates that an employer must take into account employees’ reasonable expectations when making decisions. The employees’ reasonable expectations are relevant in determining whether or not the implied duty of trust and confidence has been breached.  Employers who choose to make assertions like the ones made by IBM, should ensure that they practise what they preach!

Cheryl Hogg
Trainee Solicitor – Employment Law

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