HM Insights

High Court holds housing trust in breach of contract further to demotion for Facebook comment

Smith v Trafford Housing Trust [2012] EWHC 3221 (Ch)

Social media cases have been in the news this year, and the latest is another cautionary tale for employers seeking to discipline for social media use outside the workplace.


This claim was not an employment tribunal claim, Mr Smith having missed the statutory time limit to raise unfair and wrongful dismissal claims within the tribunal.  Instead, it was a claim for damages in the civil courts for breach of contract.

Mr Smith, who was a practising Christian and occasional lay preacher, had, on the morning of Sunday 13th February 2011, posted a link to a BBC news website article headed "Gay church 'marriages' set to get the go-ahead".  He had then commented that this was "an equality too far", and later made a further comment outlining his views in response to a work colleague's reply to this post.

These comments came to his employer's attention further to a complaint from a colleague who had seen the relevant postings on Facebook, though he himself was not one of Mr Smith's

Facebook friends. As a result of these comments, Mr Smith was suspended by his employer, a large housing association, and was subject to disciplinary action. This culminated in a finding of gross misconduct, but rather than dismiss Mr Smith, a decision was taken to demote him from his managerial role to a more junior role, also leading to a staged pay cut of over £13,000. The employer's rationale was that Mr Smith had breached the Trust's code of conduct and founded upon the potential for the postings adversely to impact on the Trust's reputation. Mr Smith therefore raised a claim for breach of contract in respect of the decision to demote him (though he continued to work in the demoted position).


The High Court rejected the three reasons put forward by the Trust to justify its finding of misconduct.  Firstly, it found that Mr Smith had not brought the Trust into disrepute.  The "moderate expression" of his particular views outside working hours on his personal Facebook wall (even though he had identified himself as an employee of the Trust on his profile) could not amount to bringing the Trust into disrepute. Secondly, it found that he had not promoted religious views among colleagues and customers in breach of the Trust's code of conduct.  The terms of the code itself did not extend to Mr Smith's personal Facebook wall, nor did the postings amount to "promotion" of religious views.  Finally, it held that Mr Smith had not mistreated fellow employees, having concluded the employee who found the observations "blatantly homophobic" held a view that was not objectively reasonable.  As the Trust only had a contractual right to demote upon a disciplinary sanction of misconduct, the demotion imposed constituted a breach of contract in the absence of any misconduct by Mr Smith.

Damages for this breach were, though, limited to under £100.  This was the difference between the amount payable to Mr Smith during his statutory 12 week notice period under his previous contract of employment, and the amount paid to him in the demoted role during this period. Damages were limited to this amount to reflect that the Trust could contractually dismiss Mr Smith by giving 12 weeks' notice, albeit that Mr Smith could raise an unfair dismissal claim in these circumstances. Although it was recognised by the court that the Trust may well have not dismissed Mr Smith if it did not have the requisite disciplinary power to do so, it was found not to be within the remit of the court to consider this as part of the compensation for breach of contract,


It would appear from the facts of this case that the Trust were lucky that Mr Smith missed the statutory time limit to raise unfair dismissal proceedings. If he had done so, he may have been successful in an unfair dismissal claim (given the differences in the role and salary, the court found that there had been a dismissal in law) and therefore entitled to a much greater compensatory award reflecting loss of salary and benefits.

Indeed, the High Court expressed its dissatisfaction at the financial outcome of the case, commenting that "Mr Smith was taken for task for doing nothing wrong" and that "A conclusion that his damages are limited to less than £100 leaves the uncomfortable feeling that justice has not been done to him in the circumstances". If a tribunal were to come to the same conclusion, then a substantial award could have been made in Mr Smith's favour.

This case proves another salient reminder that employers should not simply engage a reflex action of finding misconduct in cases involving social media.  Nor should they seek to rely on the often used "damage to reputation" without being able to show such damage, or at the very least, the real risk of damage being done.

Further, and especially important for employers such as housing associations and public authorities that often have detailed and prescriptive policies, it is vital that these policies have sufficient width of application to allow disciplinary action to be taken for personal posts made in personal time, subject of course, to being able to justify why action should be taken in such circumstances.