UK: Unfair dismissal – without prejudice letter amounted to a dismissal
Mr Meaker was employed by Cyxtera Technology UK Ltd (Cyxtera) in a heavy manual role. After suffering back injuries, he went on long-term sickness absence and made an unsuccessful application for income protection payments.
He was told by Cyxtera’s HR manager that they were considering terminating his employment and the possibility of a settlement agreement was discussed, but no agreement was reached. A few weeks later, Cyxtera sent Mr Meaker a letter headed “without prejudice” which:
- said his employment would terminate by “mutual agreement” due to capability
- informed him his last day of employment would be 7 February 2020
- gave details of the pay he would receive up to that date, as well as details of the pay in lieu of holiday and notice that he would receive, and
- offered Mr Meaker an ex-gratia payment if he signed the enclosed settlement agreement.
The tribunal concluded that the letter amounted to an effective dismissal letter. Despite the incorrect reference to mutual agreement and the “without prejudice” heading, the letter gave a clear termination date, set out the payments Mr Meaker would receive due to the termination and advised that his P45 would be issued. It was clear that the termination of his employment was not dependant on him entering into the settlement agreement.
Mr Meaker’s employment was therefore terminated on 7 February and that was the date from which time started running for him to bring his employment tribunal claim. The tribunal went on to conclude that Mr Meaker’s unfair dismissal claim had been brought out of time and that time should not be extended to allow it to proceed. Mr Meaker appealed.
The EAT said that where an employer dismisses an employee with immediate effect, without giving the period of notice required by the contract, the ‘effective date of termination’ is the date of the summary dismissal, whether or not the employer made a payment in lieu of notice. The EAT therefore upheld the Tribunal’s decision.
It noted that, where there are settlement discussions ongoing, it may be safer to separate out the open and without prejudice aspects into separate correspondence.
Key Action Points for Human Resources and In-house Counsel
The case serves as a reminder for employers of the importance of making sure that a termination letter is clear and unambiguous about the fact that the employee’s employment is being terminated and the date on which the termination takes effect.
It is also an example of how it is best to use separate documents for open and without prejudice communications to avoid confusion, but it is possible for a document to contain parts that are open and parts that are without prejudice.
