Phoenix House Limited v Stockman - Mutual trust and confidence: covert recordings

The Employment Appeal Tribunal (EAT) has ruled that an employee who covertly recorded a meeting did not automatically break the implied term of mutual trust and confidence.

In a contract of employment, there exists an implied term of mutual trust and confidence between the organisation and its employee. This means that if either party conducts themselves in such a way that undermines or destroys the employment relationship, the other party can regard their actions as a fundamental breach of the contact. For example, this is a fair reason to dismiss an employee.

Under the Employment Rights Act 1996, when considering the basic and compensatory award that an individual is entitled to when they have successfully claimed unfair dismissal, tribunals are able to reduce or extinguish these awards by an amount that they consider ‘just and equitable’ if an employee commits misconduct during their employment. This can happen even if the organisation was not aware of the misconduct prior to dismissal.

FACTS

This case concerned an employee who had successfully claimed unfair dismissal to the employment tribunal (ET). During the remedy hearing she disclosed that, prior to her dismissal, she had covertly recorded a meeting with the organisation’s head of HR. She had done this as she felt she was to be unfairly reprimanded for bringing to light issues in her treatment from management.

The organisation argued that, by recording this meeting, the employee had breached the implied term of mutual trust and confidence and they would have dismissed her for gross misconduct had they known. They further argued that, as a result of this, the employee’s basic award should be reduced to nil.

The tribunal disagreed, finding that the employee had not made the recording for the purpose of entrapping the organisation and that she was simply trying to protect herself.

EAT

The organisation appealed against the amount awarded in compensation to the Employment Appeal Tribunal (EAT), who dismissed the appeal, agreeing with the reasoning of the ET.

In forming their decision, the EAT recognised the ease in which meetings can be covertly recorded in the modern age and that, in their experience, this was not uncommon. They explained that these recordings are not necessarily an action taken by employees to entrap an organisation or gain a dishonest advantage; they may simply be done to protect the employee from any risk of being misrepresented or to enable them to seek further help, such as union advice.

Whilst the EAT agreed that it was likely to be ‘good employment practice’ for either party to state an intention to record important meetings, and it will generally be an act of misconduct for an employee not to do this, there is no requirement on an employment tribunal to find that this automatically served to breach the implied term. When considering these situations, tribunals will look at:

  • the purpose of the recording – whether it was the act of a manipulative employee seeking to entrap an organisation or a confused employee wanting to keep a record
  • the employee’s blameworthiness in making the recording – whether the employee was specifically told not to make a recording or if they were unaware through lack of experience of an expectation not to
  • what is recorded – whether the meeting regarded the employee themselves, which would normally be recorded and shared, or if it concerned highly confidential matters
  • the attitude of the organisation in response to the meeting being recorded – whether they considered this an act of gross misconduct and if they had informed the employee of this prior to this e.g. in a disciplinary policy. 

Finally, the EAT held that, when considering a ‘just and equitable’ deduction in compensation, tribunals will look at what that particular organisation would have done in respect of that particular employee. When applied to this case, the employee had recorded the meeting purely because she was concerned with her own position.

Note for employers

Organisations should be mindful that employees may attempt to secretly record important meetings concerning their own situation, such as a disciplinary hearing, without prior permission. It is therefore good practice to clearly specify within policies that this will be treated as a form of misconduct.

It is also advisable to ask employees at the start of a meeting if they are intending to secretly record it and remind them of the consequences for doing so.

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