Unfair dismissals and the time limit to bring a claim
In order to bring a claim for unfair dismissal, an employee must have been “dismissed” and this happens where:
- The employee’s contract is terminated by the employer (with or without notice).
- The employee is employed under a limited-term contract and the contract terminates because of the limiting event.
- The employee terminates their contract (with or without notice) in circumstances in which they are entitled to do so without notice by reason of the employer’s conduct.
A claim for unfair dismissal must be brought within three months of the employee’s “effective date of termination” (EDT) (subject to the extension of time for Acas early conciliation), and a Tribunal may only extend the time where it is satisfied that it was “not reasonably practicable” for the claim to have been presented in time.
The decision of the Employment Appeal Tribunal (EAT)
In the recent case of Meaker v Cyxtera Technology UK Ltd , Mr Meaker suffered injuries to his back which resulted in an extended period of time off work. It was agreed that due to his heavy manual role, it was likely the limitations on his ability to do his job would be permanent. On 5 February 2020, Cyxtera wrote a letter to Mr Meaker which was headed “without prejudice” and said his employment would terminate by mutual agreement and by reason of capability, and his last day of employment would be 7 February 2020. The letter also said he would receive a payment in lieu of notice (PILON) and a payment for his untaken annual leave, and set out an ex gratia payment that was conditional on Mr Meaker signing an enclosed settlement agreement. The payment of Mr Meaker’s PILON and untaken annual leave was received in his bank account on 14 February 2020. Mr Meaker did not sign the Settlement Agreement.
Mr Meaker brought an unfair dismissal claim and disagreed with Cyxtera’s argument that his EDT was 7 February 2020. He argued that the letter was without prejudice and his employment was only terminated when he was paid the PILON on 14 February 2020. The Employment Tribunal held that Mr Meaker’s EDT was 7 February and the letter written on 5 February was a dismissal letter. The consequence of this was that his unfair dismissal claim had been presented out of time. Mr Meaker appealed.
The EAT agreed with the Tribunal and found the 5 February letter to be a termination letter. They said the effective date of termination for the purposes of an unfair dismissal claim was the date he received that letter (7 February) and found the Tribunal had been entitled to find that his letter had been sufficiently clear and unambiguous to dismiss him. They said Cyxtera had decided to unilaterally terminate his employment with effect on 7 February 2020, and only the offer of an ex gratia payment was put forward on a without prejudice basis and subject to Mr Meaker signing the Settlement Agreement. The EAT concluded that his unfair dismissal claim had been presented out of time and the Tribunal had been entitled to refuse to extend the time to enable the claim to proceed.
Despite the reference to mutual agreement and the “without prejudice” heading, the letter clearly communicated the termination of Mr Meaker’s employment and this was followed up by payment of the PILON.. Even though no agreement had been reached between Mr Meaker and Cyxtera, the letter gave a distinguishable termination date and set out the payments he would receive as a result of his termination. The EAT noted that the letter was also clear that the termination of his employment was not conditional on him entering into the settlement agreement and the letter was not “out of the blue” as it followed a conversation where they agreed he could not return to his existing role because of his limitations.
Although the EAT held that a single document can contain both open and without prejudice content, it would be safer and avoid possible confusion if separate documents are used for these communications. If you would like advice on without prejudice discussions or the termination of an employee’s contract, then please contact the Employment Team.