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Dismissal or termination by agreement?

Posted by TonyBrownEmploymentSolicitor on August 22, 2013

Employment can be terminated in various ways. Some methods will amount to a dismissal in law and others will not. Many of the statutory rights, for example the right not to be unfairly dismissed, are largely dependent on whether or not the termination has taken place by way of a dismissal.  If employment is terminated by mutual consent, in theory the employee has no entitlement to claim unfair dismissal.

In the next case, the issue was whether the Claimant’s employment ended because of mutually agreed termination or by dismissal.

The Claimant was employed by Pertemps, but was permanently assigned by them to work for a specific client. When that client’s need to utilise the Claimant’s services ended, Pertemps offered the Claimant a choice explained in a letter from HR as follows:

“Depending on how you feel yourself, whether you are happy for Pertemps to keep on looking for another assignment for you elsewhere, and we do have other bits and pieces in at the moment or things coming up in the New Year, that we’ll be happy obviously to speak to you about or … there might be an entitlement for you to a redundancy payment from Pertemps because of the work you have previously … for the last 2 ½ years … has come to a natural end.”

The letter went on to explain that under either option the Claimant would receive 2 weeks’ notice pay.

The Claimant chose the redundancy option (in part because he had been informed by the Job Centre that he could not receive unemployment benefit if he was still employed.) Accordingly, HR wrote to the Claimant to confirm that his position was redundant and that he was to treat the letter as "formal notice of redundancy". The letter told him that he had a right to appeal "against the decision to terminate your employment" (which he did, unsuccessfully.)

When the Claimant claimed unfair dismissal before the employment tribunal, Pertemps argued that there was no dismissal but that the employment had ended consensually, by mutual agreement.

The employment tribunal accepted this argument and dismissed the Claimant’s claim for unfair dismissal. The EAT overturned the tribunal’s decision and substituted a finding that the Claimant had been dismissed.

The EAT said that the question of whether there was a dismissal for unfair dismissal purposes depended on whether the contract of employment had been terminated by the employer. All the language used by HR was consistent with termination by the employer. The choices offered to the Claimant both involved his being given notice. The EAT rejected the employer's arguments that "notice" and "redundancy" were loose terms, not intended to have their formal meaning, and that the right to appeal was "meaningless".

If you would like advice about how the issues in this note apply to your situation, please contact Tony Brown on 01225 740097 or by e mail to tony@bathemploymentlaw.co.uk

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