Mutual trust and confidence

The implied term at the heart of most constructive dismissal claims — a duty neither side has to write down because the law puts it into every employment contract automatically.

Is mutual trust and confidence written into my contract?

No — and it does not need to be. It is a term implied by law into every contract of employment, regardless of what your written contract or staff handbook says. You cannot usually contract out of it, and it applies whether or not your employer has even heard of it. This is different from an express term, which is something the contract actually states, such as your pay or hours.

Does my employer have to intend to damage the relationship for this to be breached?

No. The test is objective. It asks whether the employer's conduct, viewed objectively and without reasonable and proper cause, was calculated or likely to destroy or seriously damage the relationship of trust and confidence — not whether the employer meant to achieve that result. A manager who mishandles a situation carelessly, with no intention of pushing anyone out, can still be found to have breached the term if the effect of the conduct was serious enough.

Can my employer ever justify conduct that would otherwise breach the term?

Yes, in principle. The term is only breached where the employer acted "without reasonable and proper cause". Where an employer has a genuine and proper business reason for a difficult decision — for example, a properly conducted disciplinary investigation into a real concern — that may amount to reasonable and proper cause, even if the process is distressing for the employee. Whether the cause was truly reasonable and proper, and whether the manner of acting on it went further than it needed to, is a question of fact for a tribunal.

If I think the term has been breached, do I have to resign straight away?

You should not delay unreasonably. If you carry on working for a long period after the conduct you complain of, without objecting, a tribunal may find that you affirmed the contract — accepted the breach and chose to continue — which can defeat a constructive dismissal claim built on it. There is no fixed number of weeks; it depends on the circumstances, including whether you were still raising the issue internally in the meantime.

Is unfair treatment the same as a breach of mutual trust and confidence?

No. Plenty of workplace conduct is unfair, unpleasant or badly handled without crossing the legal threshold. The term is breached only where the conduct, judged objectively, was calculated or likely to destroy or seriously damage the relationship — a high bar. A single unfair decision, an isolated rude comment, or an ordinary managerial disagreement will not usually be enough on its own.

Can an employee breach the implied term too?

Yes — it is a mutual term, owed by both sides. An employee who, for example, deliberately undermines their employer, discloses confidential information improperly, or engages in serious dishonesty could be found to have breached the same implied term, which can in turn justify summary dismissal by the employer. Most reported cases concern employer conduct, because it is usually the employee who resigns and claims constructive dismissal, but the obligation runs both ways.

What the term actually says

Every contract of employment in England and Wales carries an implied term that neither party will, without reasonable and proper cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence between them. Nobody has to write it into the contract, the staff handbook or an offer letter. It is implied

— meaning it is read into the relationship automatically, in the same way that a duty to take reasonable care for an employee's safety is implied without anyone spelling it out.

This puts it in a different category from an

, which is something the contract actually states — your pay, your hours, your place of work. An employer cannot usually remove the implied term of mutual trust and confidence by leaving it out of the written contract, because it does not come from the written contract in the first place. It comes from the nature of the employment relationship itself.

The term is mutual, as the name says. Most reported cases concern an employer's conduct, because it is usually the employee who resigns and brings a claim. But the obligation runs both ways: an employee who seriously undermines the employer — through dishonesty, or a deliberate campaign against the business, for example — can also be found to have breached it, which is capable of justifying the employer's own decision to dismiss.

Where the term came from

The modern formulation was developed through a line of Employment Appeal Tribunal and Court of Appeal decisions in the early 1980s. In

Woods v W M Car Services (Peterborough) Ltd

, the Employment Appeal Tribunal — presided over by Browne-Wilkinson P, and later affirmed by the Court of Appeal — set out the formula that has been repeated in almost every case since: an employer must not, without reasonable and proper cause, conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee. Ms Woods, asked to accept a pay cut and a heavier workload alongside a demotion in job title, resigned and successfully argued that the cumulative conduct met that test.

The term was placed on its firmest footing by the House of Lords in

Malik v Bank of Credit and Commerce International SA

[1997]. The claimants were former employees of BCCI, a bank that collapsed amid findings of large-scale fraud. They had not personally been accused of wrongdoing, but argued that having worked for a bank later shown to have been run dishonestly made them unemployable elsewhere — a "stigma" loss. The House of Lords held that operating a dishonest and corrupt business was capable of breaching the implied term of mutual trust and confidence, even though the employees knew nothing about the fraud at the time and the bank had not targeted them individually.

confirmed the term as a standing feature of every employment contract and confirmed that, where a breach is serious enough, it is ordinarily a repudiatory breach of contract in its own right — without needing to be squeezed into some other category of express term.

Together, these cases mean the term does not need to be argued into existence in each new case. It already exists. What a tribunal has to decide is only whether, on the facts in front of it, that existing term was breached.

The legal test, in plain English

The test has three moving parts, and it helps to take them in order.

1. Was there conduct, without reasonable and proper cause?

The starting point is identifying what the employer (or employee) actually did or failed to do, and asking whether there was a genuine and proper reason for it. An employer facing a real disciplinary concern, handled properly, may well have reasonable and proper cause for steps that are still unwelcome or upsetting. An employer acting out of spite, favouritism, or simple carelessness with no proper justification is on weaker ground.

2. Was it calculated or likely to destroy or seriously damage the relationship?

. The tribunal does not ask what the employer intended, or whether they meant to force the employee out — it asks what the likely effect of the conduct was on a reasonable person in the employee's position. Good or bad intentions are part of the overall picture but are not the test itself. This is one of the most misunderstood parts of the term: an employer who never meant any harm can still be found to have breached it, if the objective effect of what they did was serious enough.

3. Was the damage serious, not trivial?

The words "destroy or seriously damage" set a high bar. Ordinary friction, an unpopular management decision properly explained, or a single lapse in judgement will not usually meet it. The conduct has to go to the root of the working relationship — the kind of act that makes it genuinely intolerable to continue, not merely uncomfortable.

Where a single incident is not serious enough on its own, a series of smaller incidents can sometimes be looked at cumulatively — the "last straw" analysis covered in more depth on the

constructive dismissal page. This page focuses on the underlying implied term itself, which is usually the duty that a last-straw argument is built around.

Kinds of conduct tribunals have considered

Every case turns on its own facts, and nothing below is a guarantee that similar conduct will be found to breach the term in a different case. But tribunals have, in different circumstances, considered the following kinds of conduct capable of breaching the implied term of mutual trust and confidence:

• Making serious, unfounded allegations of misconduct against an employee and handling the process in a way that gives them no fair opportunity to respond.
• Humiliating or belittling an employee in front of colleagues or clients, rather than addressing a genuine performance or conduct issue privately and proportionately.
• Failing to properly investigate a genuine grievance — for example, ignoring a bullying or harassment complaint for months, or dismissing it without any real inquiry.
• A sustained pattern of undermining behaviour — excluding someone from meetings they would normally attend, removing responsibilities without explanation, or a prolonged campaign that, taken together, makes the working relationship untenable.
• Operating a business in a way later found to be dishonest or corrupt, even without targeting any individual employee, as in

Each of these is an example of the

of conduct that has been found capable of crossing the line, not a rule that any instance of it automatically does. A tribunal always looks at the specific facts, including how serious the conduct was, how it was handled, and whether the employer had a genuine justification.

Why the term matters practically

The practical significance of the implied term is that its breach, where serious enough, is treated as a

repudiatory breach of contract

— the kind of breach that allows the other party to treat the contract as at an end. For an employee, that is what allows a resignation to count as a dismissal under section 95(1)(c) of the Employment Rights Act 1996, rather than simply an ordinary resignation with no tribunal claim attached.

Two further conditions sit alongside the breach itself, and both matter as much as the breach in practice:

• The employee must resign in response to the breach.
• If someone resigns for an unconnected reason — a new job, relocation, retirement — and only later points to the employer's conduct, the causal link is missing and the claim is likely to fail.
• The employee must not delay unreasonably.
• Continuing to work, and to draw a salary, for an extended period after the breach without objecting can be treated as "affirming" the contract — accepting the new state of affairs rather than rejecting it. There is no fixed cut-off; a tribunal looks at all the circumstances, including whether the employee was still raising internal complaints.

And the employer has a built-in defence: conduct carried out with

reasonable and proper cause

does not breach the term at all, however unwelcome it was to the employee on the receiving end. A properly conducted investigation into a genuine concern, handled fairly, is not a breach merely because the outcome was disciplinary action the employee disliked.

An employee raises a genuine, detailed written grievance about a manager's repeated dismissive and undermining conduct towards them in team meetings. The employer acknowledges receipt but does not investigate it at all — no meeting is arranged, no findings are ever produced — and the manager's behaviour continues unchanged over the following four months. The employee raises the lack of response twice more, gets no substantive reply either time, and eventually resigns, stating in their resignation letter that they are leaving because of the manager's ongoing conduct and the employer's failure to deal with it.

Manager's ongoing behaviour + employer's total failure to investigate

Reasonable and proper cause shown?

None offered — no investigation took place at all

Objectively serious enough?

A tribunal would weigh the total inaction over several months, not just the original conduct

Resigned because of the breach?

Yes — stated in the resignation letter

Affirmed the breach by delay?

Unlikely on these facts — kept chasing throughout, did not go quiet and stay on indefinitely

On facts like these, a tribunal would likely consider two separate strands together: the manager's underlying conduct, and the employer's own complete failure to engage with a grievance raising a genuine concern. A wholesale failure to investigate a properly raised grievance is, in itself, conduct capable of contributing to a breach of the implied term — separate from whatever the tribunal ultimately makes of the manager's original behaviour. Nothing here guarantees a particular outcome; it would still depend on the tribunal's assessment of exactly what was said, what a proper investigation would have found, and whether four months of continued complaining, rather than silence, is enough to show the employee did not affirm the contract.

Constructive dismissal

Malik v BCCI SA [1997] UKHL 23; [1997] ICR 606

Woods v W M Car Services (Peterborough) Ltd [1981] IRLR 347 (EAT); affirmed [1982] IRLR 413 (CA); [1982] ICR 693

Employment Rights Act 1996, section 95

ACAS — Implied and imposed terms

ACAS — Constructive dismissal

Mutual trust and confidence — Employment Tribunal Glossary

The implied term of mutual trust and confidence explained: its case-law origin in Malik v BCCI, the legal test, and why most constructive dismissal claims depend on it.