The first claimant was employed by and ultimately became a Director and general manager of the respondent company. The second claimant was employed as contracts manager. The company was owned by Mr Bell who was the sole shareholder, and in later years significantly cut back his involvement with the business. The first claimant had bought a number of items for his home through the company account with the express permission of the second claimant, the agreement being that this was in lieu of payment for overtime. 

Mr Bell then dismissed the first claimant with immediate effect for ´financial irregularities´ with no right of appeal. The second claimant resigned shortly after claiming that he no longer trusted the owner and he had not taken his salary for the previous three months and that he had also invested about £12,000 in the business in order to keep it trading. It was held that the first claimant was unfairly dismissed, and that the second claimant was constructively dismissed.

PRACTICAL LESSONS

There was an obvious fundamental breach of contract in that the second claimant was not paid, which is a breach of an express term of the contract. However, the second breach recognised by the tribunal; the breach of the ´implied duty of trust and confidence´ is more interesting here. 

The second claimant argued that the dismissal of the first claimant (his ´right hand man´) and the failure to consult him about relocation of staff had left him feeling undermined. Thus, whilst he was the sole shareholder, Mr Bell was required to consider the practical reality that the second claimant effectively ran the business which contributed towards the finding that the owner ´destroyed or at least severely damaged´ the relationship of trust and confidence.