Background: A claim for unfair dismissal must be submitted to a Tribunal within three months of the ‘effective date of termination’ (EDT) (with an allowance for any time spent in ACAS early conciliation).
Facts: The employee, Mr Meaker, was employed by Cyxtera Technology UK Ltd in a manual night role. He suffered back injuries and was off work for an extended period. Both Mr Meaker and Cyxtera agreed it unlikely that he would ever be able to return to his role and they discussed terminating his employment under a settlement agreement.
Mr Meaker was under the impression that these settlement discussions would continue, but instead Cyxtera wrote to him on a ‘without prejudice’ basis, enclosing a draft settlement agreement. The letter referred to a mutual agreement to terminate Mr Meaker’s employment which would take place on 7 February 2020. It also set out Mr Meaker’s notice and holiday pay entitlement and explained that he would be sent his P45. The letter also offered a further payment conditional upon him entering into a settlement agreement.
Mr Meaker did not enter into the agreement but instead wrote to Cyxtera on 7 February rejecting the offer. Cyxtera emailed Mr Meaker to acknowledge his rejection of the offer and to explain why Cyxtera could not allow him to return to work. On 14 February, Mr Meaker received a payment which he was told reflected his payment in lieu of notice and outstanding holiday pay.
Mr Meaker brought an unfair dismissal claim. A preliminary argument arose about whether the claim had been brought in time. If the EDT (see Background) was 7 February (as stated in the letter) then Mr Meaker’s claim would be out of time. Alternatively, if it was the date of the payment (14 February) the claim would be in time and could proceed.
The Tribunal held that the ‘without prejudice’ letter was a dismissal letter and that the termination date was 7 February 2020, meaning Mr Meaker’s claims were out of time. Mr Meaker appealed.
The EAT dismissed Mr Meaker’s appeal. It agreed that the EDT was 7 February 2020. It was sufficiently clear in the ‘without prejudice’ letter that Cyxtera was terminating Mr Meaker’s employment, despite the incorrect reference to it ending by mutual agreement. Although the letter was headed ‘without prejudice’, it could be read as having two distinct parts: one dealing with termination and Mr Meaker’s contractual payment entitlements; the other offering the ex-gratia payment subject to a settlement agreement. The letter was clear that the termination date was 7 February 2020 and that this was not dependent or contingent upon anything else happening.
As it would have been reasonably practicable for Mr Meaker to present his unfair dismissal complaint in time, the Tribunal had correctly decided not to extend time to allow his claim to proceed.
Although the decision in this case was favourable to the employer, the main takeaway is one of caution. It is possible for a ‘without prejudice’ letter to terminate employment unilaterally (i.e. by the employer) even if it states that the termination is by mutual agreement.
Therefore to avoid disputes of the kind that arose in this case, and any inadvertent termination of employment, employers should always ensure that notices of termination of employment are clear and unambiguous in ‘open’ correspondence which clearly states the EDT. Any communications relating to the potential settlement of disputes arising from termination should be separate and contained in a ‘without prejudice’ letter. This letter should be drafted carefully to ensure that the without prejudice protection extends to the entire letter and not just the offer of settlement.