How should employers handle a breakdown in trust and confidence?

A breakdown in trust and confidence can quickly disrupt teams, leading to grievances, sickness absence, resignations and costly employment disputes. Taking the right steps from the outset helps reduce legal risk while protecting morale, client relationships and business continuity.

This article explains what “trust and confidence” means in employment law, why breakdowns matter, how to distinguish competing allegations, and the practical steps employers can take to manage issues fairly, consistently and commercially.

What does “trust and confidence” mean in employment?

Every employment relationship includes an implied term that neither the employer nor the employee will act in a way that destroys or seriously damages mutual trust and confidence. A breakdown may arise from someone’s conduct or how a situation is managed.

Common triggers include:

• Dishonesty
• Misconduct
• Confidentiality breaches
• Refusal to follow reasonable instructions
• Repeated policy breaches
• Bullying and harassment allegations
• Social media misuse
• Mishandled performance management
• Deteriorating working relationships

Where an employer considers that an employee has undermined trust and confidence, dismissal may be pursued for misconduct or “some other substantial reason” (SOSR), but only after a fair process and consideration of alternatives. Where an employee alleges that the employer has breached trust and confidence, there is a risk of constructive dismissal if the employee resigns in response to a fundamental breach. In either scenario, consistency, fair procedure and clear evidence are essential.

What can amount to a breakdown in trust and confidence?

A breakdown is usually indicated by conduct that is, or is perceived to be, fundamentally inconsistent with a fair and respectful employment relationship. Examples include:

• A serious unilateral change to key terms without consultation, repeated undermining of an employee, or ignoring legitimate grievances.
   
• Bullying or harassment that is not addressed, or disproportionate disciplinary action without proper basis.
   
• Persistent failure to pay correctly or to follow stated procedures in a way that erodes good faith.

The assessment is fact-sensitive and context-driven. One-off minor errors will rarely be enough; patterns of behaviour or a single serious incident are more likely to meet the threshold. Employers should document events objectively and avoid emotive language when assessing whether trust and confidence have broken down.

How should employers respond to a breakdown in trust and confidence?

If employers identify a potential breach of mutual trust and confidence, they should act promptly, fairly and in a way that is likely to restore confidence where possible.

• Identify the issue early, separate facts from perceptions, and record an objective chronology of events to inform proportionate next steps.
   
• Meet with those involved, listen without prejudging, and consider informal resolution or mediation where appropriate.
   
• Follow relevant procedures, including grievance, disciplinary or dignity at work processes, consistently and in a timely, evidence-based way.
   
• Consider reasonable management action, such as training, supervision changes or temporary adjustments, to reduce friction and rebuild working relationships.

Where trust cannot be restored, employers should assess lawful options, such as reassigning duties or, as a last resort, ending employment following a fair process, and document the rationale for any decision.

What are the legal and commercial risks of getting this wrong?

Failing to handle a breakdown in trust and confidence properly can create several legal and commercial exposures.

• Tribunal risks: Claims for constructive dismissal or unfair dismissal may arise where an employer fails to follow a fair procedure, acts inconsistently, imposes a disproportionate sanction, or otherwise commits a fundamental breach of the implied duty of mutual trust and confidence.
   
• Discrimination claims: If the employer's response is influenced by a protected characteristic or applied inconsistently between employees, there is a risk of discrimination, harassment, or victimisation claims.
   
• Reputational damage: Internal disputes can become public, particularly where social media is involved, potentially damaging relationships with clients and business partners.
   
• Breach of contract allegations: Failure to follow contractual disciplinary procedures or established policies may expose employers to breach of contract claims.

Summary

Breakdowns in trust and confidence are often preventable and, where they do arise, can be managed with timely, fair and well-documented action. The core obligations are to act reasonably, follow procedures, communicate openly and base decisions on evidence. A consistent, legally compliant, and commercially focused approach reduces legal risk, supports a defensible position if challenged, and improves the chances of restoring an effective working relationship.

Further Advice

If you have concerns about a breakdown in trust and confidence in the workplace, our Peace of Mind Team can provide clear, practical advice on the best way forward.

For advice and support, contact our Employment Team by emailing employment@warnergoodman.co.uk or calling 023 8071 7717.