When the foundation of trust crumbles, is the relationship salvageable or is it time to call it quits?
At the heart of employment law in Aotearoa lies the concept of "trust and confidence".
It forms the bedrock of the employment relationship.
It is essential for the smooth functioning of any workplace, creating an environment where both employers and employees can work together harmoniously, share mutual respect, and feel secure in their roles.
But what happens when this vital relationship is broken, and trust is shattered?
"Trust and Confidence" is more than just an abstract concept - it is a legal principle and the foundation on which an employee's relationship with their employer rests. This concept was solidified in the Employment Court and is central to the duty of good faith that both employers and employees owe each other under the Employment Relations Act 2000.
For employers, this means acting in a way that fosters a positive working environment where employees feel valued, respected, and able to perform their duties without fear of undue criticism or discrimination. For employees, it means being honest, performing their duties to the best of their ability, and respecting company policies and procedures.
The mutual duty of trust and confidence requires both parties to act in good faith, and a breach can lead to serious consequences for both parties, including the potential for personal grievances.
What Breaks the Trust and Confidence?
The relationship of trust and confidence can be broken by either party through actions or behaviours that undermine that trust.
Some of the most common ways this occurs include:
Breach of confidentiality: One of the most severe ways trust can be broken is when confidential information is shared without permission. This could be personal information about an employee or sensitive business information. If an employer fails to keep an employee’s personal data secure, or an employee shares confidential company secrets, the relationship can be permanently damaged.
Failure to act in Good Faith: Both employers and employees have a duty to act in good faith. If either party is dishonest, misrepresents information, or fails to meet their obligations in the employment relationship, trust will quickly erode. This could manifest in many ways, from an employer making misleading promises to an employee, to an employee underperforming or failing to follow workplace procedures.
Unreasonable or unjustified actions: If an employer treats an employee unfairly or acts without justification, such as imposing harsh disciplinary actions without proper evidence, this can create a situation where the employee feels undermined and unappreciated.
Unjustified or excessive monitoring: While employers are within their rights to monitor performance and ensure the health and safety of their workers, excessive or unjustified monitoring can lead employees to feel micromanaged or distrusted. This could involve invasive surveillance, such as constant monitoring of an employee's every move, or constantly questioning their every decision.
Harassment or bullying: A toxic work environment where harassment or bullying is allowed to occur can rapidly destroy trust and confidence. If employees do not feel safe or supported in their role, it’s impossible for trust to flourish.
When the relationship of trust and confidence is broken, the consequences can be significant for both parties.
Employers may find themselves facing personal grievances, claims of unfair treatment, and even claims of constructive dismissal. Employees who feel that their trust has been betrayed may resign or take legal action, which could result in costly and lengthy disputes. If trust is broken, an employee may choose to resign, claiming constructive dismissal, arguing that the working environment became so unbearable due to the employer’s actions that they had no choice but to leave. This could lead to financial compensation or reinstatement orders for the employee. The employer might be required to pay compensation for lost wages and any emotional distress caused by the breach.
When trust and confidence are undermined by the actions of the employer, employees may seek redress through personal grievance claims. They may argue that the breakdown in trust was so severe that the employment relationship is no longer viable. In some cases an employee may claim constructive dismissal if they feel that the employer’s actions - such as bullying or unfair treatment - have made it impossible for them to continue working under the same conditions.
Further, the loss of trust between an employer and an employee doesn’t just affect the individuals involved - it can have a ripple effect throughout the entire workplace. Disruptions in morale, productivity, and engagement are common when trust is broken. Employees may become disengaged, and teamwork can suffer, leading to poor overall performance.
But can it (or should it) be repaired?
When trust is broken, it can feel like the foundation of your workplace is crumbling. But the reality is, rebuilding trust is possible with the right approach - regardless of who is at fault.
It’s important to recognise that trust isn’t a one-way street; both the employer and employee play a role in its maintenance and its repair. When things go wrong, it’s essential to take steps to restore that trust, or - if that’s no longer possible - find a fair and respectful way to end the relationship.
Here’s some practical tips on how to start to repair the damage and rebuild trust, or navigate the decision to move on:
Acknowledge and address the issue - Start by openly acknowledging the breakdown in trust. Have an honest conversation with the employee, listen to their concerns, and take responsibility where necessary. Both sides should be heard to understand the root of the issue.
Make tangible changes - Identify the underlying causes of the breakdown, whether it’s poor communication, unfair treatment, or lack of transparency. Make meaningful changes to resolve these concerns and demonstrate your commitment to improvement.
Show your commitment - Reassure the employee that their concerns are taken seriously. Offer emotional and professional support, and clearly communicate the steps being taken to rebuild trust and prevent future issues.
Consistency is key - Trust takes time to restore. Follow through on promises and consistently act in ways that demonstrate your commitment to a positive and supportive work environment. Gradually, trust can be rebuilt through consistency and transparency.
Unfortunately, not every relationship can be salvaged. In some cases, despite your best efforts or intentions, trust may be too damaged to rebuild, and it may be time to consider ending the employment relationship.
If trust cannot be restored, and the misconduct is not serious enough to warrant dismissal consider a negotiated exit. This should always be handled with respect and fairness. Ensure both parties are clear on the reasons for the departure and that any necessary agreements are made. Provide support during the transition and focus on maintaining dignity for both sides.
At the heart of every successful employment relationship is trust and confidence. Without it, the relationship becomes strained, and productivity, engagement, and morale are all negatively affected. Employers must be proactive in maintaining and nurturing trust with their employees, and when trust is broken, swift action is necessary to repair the damage.
Remember that maintaining trust isn’t just good practice - it’s a legal requirement. Uphold trust and confidence in the workplace, and you’ll ensure long-term success and a positive work culture.
For more insights on handling trust-related issues in the workplace, contact the team at Yellow. We specialise in helping businesses foster strong, respectful, and legally compliant workplace relationships.
Disclaimer This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.
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