Ireland’s Workplace Relations Commission finds employer broke bond of trust by providing negative reference

The WRC said the office administrator was unfairly dismissed by her employer, a manufacturing company, because the company had breached the implied contractual term of mutual trust and confidence.

The administrator was employed by the manufacturer for eight years and had a good working relationship with two directors, one of whom resigned in early 2018. She remained working with the remaining director after a transfer of undertaking took place.

Later in 2018, she applied for a job with a public body, which was offered to her subject to providing Garda (police) vetting and a reference. The administrator submitted the names of both directors as referees. One reference was marked at the highest level, while the reference from the remaining director was provided with five out of 15 categories marked unsatisfactory. As a result, her job application was not processed.

The administrator felt that the unsatisfactory reference was designed to keep her in the company’s employment. She subsequently suffered from anxiety and low mood and later was advised not to return to work. She felt that the bond of trust between her and the director was irrevocably broken and after a period of sick leave she eventually resigned from her position.

Under the terms of the Irish Unfair Dismissal Acts 1977-2015, the burden of proof in a claim for constructive dismissal lies with the employee, who needs to prove that their resignation was involuntary.

Claims for constructive dismissal are generally based upon two tests: first, the ‘contract test’ which ascertains whether the employee's resignation arose as a consequence of a breach of contract, and second, the ‘reasonableness test’, which examines whether an employer has conducted themselves so unreasonably that the employee cannot fairly be expected to put up with it any longer.

In this case, the adjudicator said the issue was more of reasonableness than contractual but hinged on the bond of trust issue. As the administrator had put an emphasis on the broken bond of trust, the adjudicator referred to a leading UK decision, which confirmed the existence of the implied term of mutual trust and confidence or bond of trust in a contract of employment. Although an employer might not be under an obligation to improve the future job prospects of an employee, damaging such prospects intentionally would amount to the breach of mutual trust and therefore the breach of the implied contract obligation.

The adjudicator also said that, although all the evidence pointed at a high standard of the administrator’s performance, the accuracy of the reference itself was not the main point and the focus should be on the employer’s conduct considered in the light of available evidence.

The adjudicator decided that the director must have known that providing a negative reference would prevent the employee from securing the position with the public body. The bond of trust, therefore, was irrevocably broken and the administrator was justified in resigning.

As part of the "reasonableness test", the employee also needed to prove that she had exhausted the internal grievance process prior to lodging the claim. Based on the contractual evidence, her initial contract contained no grievance procedure. The second contract was disputed and only referred to a limited grievance process with no appeal and no provision for an external investigation.

The grievance itself was also not internally work related but more of a personal career choice and trust issue between the two parties, with the opportunity for the employee to advance her career hindered by the poor reference.

The adjudicator concluded that in the evidence provided, the employee had significant grounds to resign, without invoking a grievance procedure, due to the bond of trust being irrevocably broken. Therefore she was unfairly dismissed and was awarded compensation of €9,000.

Employment law expert Jason McMenamin of Pinsent Masons, the law firm behind Out-Law, said: “This case demonstrates the importance for employers to have clear policies in place to deal with workplace grievances. It is not only important to have well-drafted policies and procedures in place but also that they are properly communicated to staff and put into practice in the workplace as the WRC will take this into account when awarding compensation.”

The decision may be appealed as the company was not represented at the WRC hearing, citing Covid-19 concerns.

Anton Trofimchenko of Pinsent Masons contributed to this article.