Case update: Effective termination of employment

Background

The claimant was employed in a heavy manual night role and, following an extended period off work due to back injuries, it was agreed that limitations on his ability to do heavy work were likely to be permanent.

There were conversations between the individual and the HR manager of the respondent company where the company indicated it was considering terminating the individual’s employment, and the possibility of a settlement agreement was raised.

There was not, however, a mutual agreement to terminate the individual’s employment and the individual was expecting further communication regarding alternate roles.

On 5 February 2020, the company sent the individual a letter marked “without prejudice” which the individual received by 7 February. This letter stated:

(1) that the individual’s last day of employment would be 7 February;

(2) that the individual would be paid up to that date;

(3) the amounts of holiday pay, and of the payment in lieu of notice the claimant would receive; and

(4) that the individual would be sent his P45.

The letter also offered a further ‘ex gratia’ payment, conditional on the claimant signing an enclosed draft settlement agreement.

Although the letter claimed the termination was 'mutual', the individual subsequently brought an unfair dismissal claim on the basis of unilateral termination.

Outcome

• Mutual or unilateral? Despite the letter claiming a mutual termination of employment had been agreed, this was not the case. The letter was held to be a dismissal letter as the communication of the termination was in clear and unambiguous language.
• Without prejudice? Even though the letter was marked 'without prejudice', it was held that the letter could be read in two distinct parts: (i) an open part that dealt with the termination and the payments the individual would be legally entitled to as a consequence, and (ii) a distinct without prejudice part that dealt with the proposal for a further payment if the individual agreed to the settlement agreement.
• Date of dismissal? The individual’s effective date of termination was 7 February when he received the letter. Where a dismissal is communicated by letter, it does not take effect when the employer decides upon it, or sends it, but only when the employee has actually read the letter or had a reasonable opportunity to read it.
• Time limits: In any event, the individual's unfair dismissal claim had been presented out of time, as the time limit for bringing a claim is three months, taking into account the ACAS conciliation period.

The Employment Appeal Tribunal judgment can be accessed here.