By Nigel Baker, an author for Wolters Kluwer’s Croner-i Human Resources,
It’s not as simple as it seems to part company with an employee in this day and age. There are so many potential ramifications that even a mutual parting of the ways can sometimes come back to haunt the parties and end up in an employment tribunal.
The first point to realise is that the concept of “dismissal” is a technical one, and an individual wanting to make a claim against his or her employer has to satisfy a number of qualifying conditions. The fact that the relationship between the parties has been terminated is not decisive because the employee could have voluntarily resigned or the parties may have come to an arrangement. Even a resignation may lead to a potential claim, where the employee alleges that he or she has been constructively dismissed by the actions of his or her employer which were so serious that they entitled that employee to resign with his or her legal rights still intact. A claim by an individual may be either one for unfair dismissal or wrongful dismissal depending on the circumstances and different factors apply to each. Compensation levels are capped in most successful unfair dismissal claims but are not in wrongful dismissal claims, which are based on breach of contract by the employer.
Recent cases on dismissal
In Francis v Pertemps Recruitment it was held that, in deciding whether there has been a “dismissal” for unfair dismissal purposes, the matter depended on whether the contract of employment had been terminated by the employer. The two choices given to the employee both involved his contract coming to an end without his consent so it would be wrong to characterise this as a “mutually agreed termination” rather than a dismissal. The EAT rejected the employer’s stance that the terms “ notice” and “redundancy” were loose terms and not intended to have their formal meaning.
A key issue in a dismissal case is when the act of dismissal actually arises. This starts the clock for the time limit of three months to initiate a tribunal claim. Ascertaining the precise date of dismissal is more likely to be an issue where the employee resigns than when dismissal is effected by employer communication. In both Horwood v Lincoln City Council and Sec of State for Justice v Hibbert the point was made that when an employee resigns unequivocally and seemingly with immediate effect, not in the heat of the moment and possibly on legal advice, the “effective date of termination” (EDT) for constructive dismissal purposes is the date on which the employee resigns. In Hibbert, the employee’s letter of resignation was dated 27 June 2012, but the employer’s letter accepting the resignation stated that her last working day would be 27 July 2012 and that she would be paid for the four weeks’ notice period. The EDT was still 27 June 2012 and so on the facts her claim was out of time.
When an employee resigns and alleges constructive dismissal the employer must be guilty of a serious contractual breach which in effect repudiates the employee’s contract of employment. In Wright v North Ayrshire Council it was held that such contractual breach need not be the principal reason for the employee’s resignation merely that it was an effective cause even if there were potentially other reasons contributing to the resignation. The tribunal could then assess the amount of compensation to be awarded by considering the role played by the effective breach.
If the employee fails to resign in response to the employer’s serious breach of contract he or she is in danger of affirming the contract, thus losing the right to claim constructive dismissal. There is much case law on what constitutes an act of affirmation and the effect of various periods of delay but in Cockram v Air Products plc it was held that affirmation can arise where the employee gives his or her employer a longer period of minimum notice than is required under the contract of employment. The claimant in this case had done this for his own financial reasons and this was relevant to the question of affirmation. Note that s.95(1)(c) Employment Rights Act 1996 states that the giving of notice when resigning is not automatically an affirmation of the contract.
In GM Packaging v Haslem it was decided that it was fair for a small employer to dismiss one of its employees on the recommendation of an external HR consultant who had been brought in to manage the disciplinary process against the employee who was found to have engaged in consensual sexual activity with a colleague on company premises after hours, and had made derogatory remarks about the employer. The dismissal was not outside the band of reasonable responses open to an employer and it was entitled to rely on and accept the recommendations of the external consultant who had properly investigated the incident on its behalf.