What does the implied term of trust and confidence actually mean?

Reference to the implied contract term of ‘trust and confidence’ is often made, but many people are unsure exactly what it means and why it matters in HR terms.

It’s a term that was developed through case law over a long period, and wording was clarified in a case called Malik, more than 20 years ago, as follows:

“The employer must not, without reasonable and proper cause, conduct itself in a manner calculated and likely to destroy or seriously damage the relationship of trust and confidence between employer and employee”

Implied contractual terms, such as the mutual duty of trust and confidence, are just as binding as express ones, however they can be more difficult to clearly identify, and, in the case of trust and confidence, case law is constantly exploring what kinds of actions by an employer might constitute a breach.

The implied term of trust and confidence is often central to constructive dismissal cases (where the employer’s actions have given the employee no option but to resign), and examples can include bullying and harassment, discrimination, failure to provide a safe working environment, failing to deal with grievances or concerns, unacceptable changes to the employee’s job or status.

Anything an employer does that could be seen as unethical in some way could be a breach of trust and confidence. Similarly anything irresponsible or taking advantage of the discrepancy in the positions of power between the employer and employee could also be viewed as a breach of the term.

Whilst constructive dismissal is notoriously difficult to prove, it is also difficult, stressful and time consuming to attempt to defend. In addition, clearly breach the term of trust and confidence can have a major impact on employee engagement, retention, performance and attendance rates, regardless of any legal action.

HR professionals should therefore not just look at the written contract  or specific policies when advising on the actions of managers and assessing risks of different courses of action. Irresponsible, unethical or even just unpleasant behaviour that a manager might think is ‘technically’ not unlawful could well be exactly that, in the context of the implied breach of trust and confidence.

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