Handshake Ltd v Summers - Dismissal for 'some other substantial reason' does not include power struggle over contract terms

08 April 2013

Warren Wayne

Under the Employment Rights Act, a dismissal may be fair for ‘some other substantial reason’ and previous cases have shown that this may be the case where there is a breakdown in the implied duty of trust and confidence between employer and employee.

However, in the recent case of Handshake Ltd v Summers where a senior employee had instructed solicitors to write to his employer saying that he had ‘lost complete trust and confidence’, the tribunal said that he was in fact simply engaged in a power struggle with his employer over the terms of his contract.

There was no real attempt to negotiate and the employer dismissed him on proper notice because of the ‘breakdown in their relationship’.

The tribunal found that if either party had got what they wanted by negotiation, they would have been completely happy for the relationship to continue.

So the employer did not have a ‘fair’ reason for the dismissal, and the claimant was entitled to compensation for unfair dismissal.

However, the tribunal decided that his compensation should be reduced by 40% because of his contribution to the dismissal.

Points to note –

There will be ‘some other substantial reason’ for the dismissal and so the dismissal will be fair, if it is impossible for senior executives to work together as a team or their failure to get on is damaging the operation of the organisation. That was not the case here.

The claimant in this case took a very confrontational position. He was trying to suggest that he had grounds for constructive dismissal without actually resigning in response to what he saw as a serious breach of trust and confidence by his employer. His intransigent attitude led the tribunal to conclude that he was guilty of ‘contributory fault’ so far as the actual dismissal was concerned. All parties should remember that the tribunal has the power to reduce the compensatory award by as much as it considers just and equitable where it considers that the claimant has contributed to his own dismissal
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Warren Wayne