Dismissal without prejudice – fact or fiction? (UK)
It’s not generally too difficult to know when you’ve been dismissed. Your P45 arrives, colleagues avoid eye contact and your entry pass stops working. But sometimes it’s not so clear and where your statutory or contractual rights may hang upon it, you cannot afford not to be sure.
In Meaker – v – Cyxtera Technology UK Limited last month, the seemingly innocuous question of termination date was examined from a number of different angles by the Employment Appeal Tribunal and some useful lessons offered for employers and employees skating around the margins of termination dates and limitation periods.
Mr Meaker injured his back at work. This led in time to a without prejudice conversation with the HR Manager about his possibly leaving on terms. Meaker considered those discussions ongoing and that his employer was still looking for alternative roles for him. Imagine then his surprise on receipt of a letter from Cyxtera a few days later, headed without prejudice but telling him that he had in fact agreed to leave immediately and offering an ex gratia severance payment conditional on a settlement agreement.
Because the letter was marked without prejudice and he had thought the discussions with his employer about possible alternatives to be continuing, Meaker wrote back rejecting the letter. As a result, he said, it was not effective as notice of dismissal. Whether or not in consequence of his position on that point, he did not start his unfair dismissal claim until outside the limitation period from that date.
The Employment Tribunal found (and the EAT agreed) that despite its without prejudice heading and the false premise that Meaker had agreed to go, Cyxtera’s letter was sufficiently clear in its terms that it could not reasonably be seen as anything other than a dismissal. The letter was not phrased as a proposal – it said that his termination date “will” be 7 February, that he “will” be paid certain sums by way of holiday and pay in lieu of notice, that he “will” shortly receive his P45, etc., not that any of those things “would” happen, as one might expect if the arrangement were in any way provisional. While the ex gratia severance payment offer was stated to be conditional on a settlement agreement, that was not true of either the date of termination or the dismissal itself, and the employer’s intentions were put beyond argument when Meaker’s notice and holiday pay turned up in his account a few days later.
So a tip for employers – if you do not want your without prejudice severance proposal to your employee to become a dismissal by accident, make sure that it is heavily caveated with “would” and “proposed” and “intended”, and don’t just stick a solitary “without prejudice” at the top of something which otherwise has all the language and components of a dismissal letter. Be particularly careful with written follow-ups to protected conversations, since the line which separates would you agree to leave on these terms? from you are leaving on these terms is a thin one indeed unless you are very measured in your drafting.
So what was the effect of Meaker’s outraged letter back to Cyxtera denying that any agreement on those terms had been reached, the whole basis of its purported termination of his employment?
That led the EAT into an explanation of the potential for there to be two separate termination dates, one for statutory purposes and one contractual. The statutory test (i.e. that applicable to unfair dismissal claims) is usually when any notice given by the employer expires, whether or not that termination is in breach of contract. For unfair dismissal purposes, therefore, Meaker’s push-back was of no effect and the effective date of termination was what the letter said it was, 7 February. That meant that his claim was out of time. However, the contractual position is potentially different. If the dismissal is without the proper period of notice (i.e. in breach of contract), then it is open to the employee to decline to accept that breach (“an unaccepted repudiation is a thing writ on water”, as the Court of Appeal put if far more poetically in 1951), such that the termination date for contractual purposes is when that notice, if it had been given rather than paid in lieu, would have expired. This is rarely a point worth taking for an employee unless there is some significant entitlement conditional on his remaining employed to a certain date within the notional notice period, a bonus or share or option grant, or vesting date, for example. If the employer wishes to guard against such claims then it has a pair of options – (i) provide that the benefit is withheld not just on termination pre-payment but also if notice to terminate is given before the payment date, and/or (ii) include an express right to terminate immediately with pay in lieu of notice, such that the dismissal is not then in breach of contract and there is consequently no breach for the employee to refuse to accept, if you see what I mean.
The EAT said that it was undesirable to include open and without prejudice content in the same letter, but there is no rule against it, especially if it is clear where one part ends and the other starts. The message instead is that you cannot make what is by definition an open act (a dismissal) invalid or ineffective simply by heading the letter “without prejudice”. If you have an idle moment, it is also worth considering what Cyxtera’s arguments on that letter would have been if Meaker had started his unfair dismissal claim in good time. Here he had missed that deadline and so it suited the employer to argue that its letter did constitute his dismissal, a reversal of the usual position where the employer might wish not to be bound by without prejudice correspondence referring to a termination, especially where it had not been preceded by a fair process. If Meaker had had time on his side, would Cyxtera then have relied on arguments similar to those rehearsed against it here to contend that its letter was a pure without prejudice proposal based on regrettably crossed wires between Meaker and the HR Manager and so did not terminate his employment at all? We shall never know.