Most employers will encounter situations where their relationship with an employee breaks down to the extent that business is affected to some degree; in serious cases, this may lead to dismissal of the employee. The legal process by which dismissal takes place, where there is a breakdown in the working relationship, must take into account a number of factors, and importantly must be considered to be fair.
This article outlines when a breakdown in the employment relationship may amount to ‘Some Other Substantial Reason’ (“SOSR”) and the key principles employers should consider to minimise the risk of an unfair dismissal claim.
Fair dismissal
Any dismissal (after 1 years’ continuous service) must be both fair and reasonable.
Under the Employment Act 2006 (“the Act”) there are five potentially fair reasons:
- Capability;
- Conduct;
- Redundancy;
- Restriction due to statutory provision (also known as ‘illegality’); and
- Some Other Substantial Reason.
The two-stage test the Tribunal will apply when considering a claim against an employer for unfair dismissal is that the employer must, firstly, show the reason for dismissal was one of the fair reasons and, secondly, that a fair procedure was followed.
SOSR and relationship breakdown
SOSR is commonly relied upon where there has been a genuine and irretrievable breakdown in trust and confidence between employer and employee, and where dismissal does not sit neatly within misconduct, capability or redundancy.
Case law confirms that a relationship breakdown may amount to SOSR where it arises from factors such as:
- loss of trust and confidence linked to the employee’s conduct or performance;
- reputational risk;
- undermining behaviour; or
- a serious clash in working relationships.
In Lauffer v Barking, Havering & Redbridge University Hospitals NHS Trust[1] it was found that whilst a breakdown in trust and confidence may be SOSR, it must be backed up by the employer proving that this loss of trust was due to the employee’s conduct or performance.
Similarly, in Leach v The Office of Communications (OFCOM)[2] there had been a breakdown in trust and confidence due to the reputational risk to the employer of unproven allegations. The dismissal was found to be fair, although the court emphasised that employers cannot simply use the SOSR of loss of trust and confidence as a generic label, when other grounds for dismissal may not be successful. The reason must be substantial.
The procedure
There is no prescribed procedure for SOSR dismissals. The question is whether the employer acted reasonably, taking account of:
- the seriousness of the breakdown;
- whether reasonable steps were taken to repair the relationship; and
- whether dismissal was a last resort.
In Turner v Vestric Ltd[3] the dismissal was found to be unfair. Despite the breakdown in relationship due to a clash of personalities, the employer had not done enough to try and repair the relationship, therefore reasonable steps were not taken; it must be shown that there is no other way to improve the situation.
However, where the relationship is genuinely irretrievable, tribunals may accept that further procedural steps would serve no purpose.
In Jefferson (Commercial) LLP v Westgate[4], the Court of Appeal confirmed that procedural fairness is context‑specific and there is no fixed requirement for multiple meetings if they would make no difference.
This was reinforced in Gallacher v Abellio Scotrail Ltd[5] and Matthews v CGI IT UK Ltd[6], where dismissals were upheld because further process would have been futile.
Polkey deductions – clarification
Where a dismissal is found to be procedurally unfair, compensation may be reduced (or eliminated) if the employer can show that the employee would have been dismissed in any event – known as a Polkey[7] deduction.
This principle was applied in Perkin v St George’s Healthcare NHS Trust[8], where dismissal was unfair, but no compensation was awarded because dismissal was inevitable.
Contractual procedures
Contractual processes, where they are in place, must be followed and employers will be penalised by the Tribunal or Court if they fail to follow their own procedures without good reason.
Failure to comply may render a dismissal unfair regardless of the underlying reason.
In Robb v Hammersmith and Fulham London Borough Council[9], there was loss of trust and confidence in the employee, but the Court imposed an injunction to prevent dismissal in breach of the contractual dismissal procedure. In Lauffer v Barking, Havering & Redbridge University Hospitals NHS Trust[10], there was interim relief awarded to prevent unfair dismissal while the full trial was pending; despite the loss of trust and confidence being the SOSR for dismissal, the staff handbook procedure had not been adhered to and the procedure was therefore not considered to be fair.
Barros D’Sa v University Hospital Coventry and Warwickshire NHS Trust[11] highlights that SOSR must not be misapplied. After an inquiry was held under the Trust’s contractual disciplinary scheme for misconduct of the employee, the Trust then attempted to bring further information in support of dismissal. To use SOSR for dismissal for the breakdown of trust and confidence after the inquiry would not have conformed to the dismissal procedure and therefore an injunction was upheld to prevent misapplication of SOSR.
Key takeaways for employers
- A breakdown in the employment relationship can justify dismissal under SOSR, but it must be genuine and substantial.
- Employers should take reasonable steps to repair the relationship unless it is clearly irretrievable.
- Procedural fairness is context‑specific; futility may justify a shortened process in exceptional cases.
- Failure to follow contractual procedures remains a significant risk.
- Even where dismissal is inevitable, procedural failings may still lead to findings of unfair dismissal (albeit with reduced compensation).
[1] Lauffer v Barking, Havering & Redbridge University Hospitals NHS Trust [2009] EWHC 2360 (QB)
[2] Leach v The Office of Communications (OFCOM) [2012] EWCA Civ 959
[3] Turner v Vestric Ltd [1981] IRLR 23
[4] Jefferson (Commercial) LLP v Westgate UKEAT/0128/12/SM
[5] Gallacher v Abellio Scotrail Ltd UKEATS/0027/19
[6] Matthews v CGI IT UK Ltd [2024] EAT 38
[7] Polkey v AE Dayton Services [1987] IRLR 503
[8] Perkin v. St George’s Healthcare NHS Trust [2005] IRLR 934 CA
[9] Robb v Hammersmith and Fulham London Borough Council [1991] IRLR 72
[10] Lauffer v Barking, Havering & Redbridge University Hospitals NHS Trust [2009] EWHC 2360 (QB)
[11]Barros D’Sa v University Hospital Coventry and Warwickshire NHS Trust [2001] EWCA Civ 983
