The implied term of mutual trust and confidence is defined in Malik and another v Bank of Credit & Commerce International: “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”. A breach of that term may give rise to constructive dismissal, but both elements of the ‘test’ must be met for a claim to succeed, as Sharfudeen v  T J Morris Ltd t/a Home Bargains shows.

Sharfudeen (S) sought a transfer as a manager to a new store. There were four other applicants, including three external candidates. The employer applied a selection process created for promotions rather than transfers.  S performed badly and was unsuccessful.  An external candidate, who achieved the highest score, was offered the position.  S’s grievance was rejected, he resigned and claimed constructive dismissal on the basis that the rejection of his grievance was a fundamental breach of the implied term of trust and confidence.

The ET rejected the claim. The ET accepted that the selection process used by the employer should not have applied to lateral transfers. But the position had been advertised and had attracted four other applicants. An objective method had to be devised for selecting the best candidate. The employer’s actions may well have destroyed S’s trust and confidence in his employer. However, the employer had reasonable and proper cause both for the decision in relation the new store appointment and to reject S’s grievance. S appealed.

The EAT rejected the appeal. The ET had properly applied the Malik ‘test’. It had recognised that an employee’s loss of trust and confidence in their employer is not the only question to be addressed. The other question is whether the employer had conducted itself in the way that it had without reasonable and proper cause. This question must be answered objectively and the ET was satisfied that the employer had acted with reasonable and proper cause in adopting the selection method concerned. The ET had not, as S argued, applied a range of reasonable responses test.

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