Employment Law Cases

Dismissal and 'without prejudice' letter

A letter amounted to an effective letter of termination for the purposes of an unfair dismissal claim, despite the letter being marked ‘without prejudice.’

Background

Mr Meaker, a manual worker, had been of sick for an extended period. Following conversations with HR regarding the possibility of a settled exit, his employer sent him a letter which he received on 7 February. It was headed ‘without prejudice’ and stated that there would be a mutual termination of employment with Mr Meaker’s last day of employment being 7 February. The letter offered an ex-gratia payment, conditional on Mr Meaker signing a draft settlement agreement (which he did not sign). The letter was followed by a payment on 14 February, which Mr Meaker was told reflected his payment in lieu of notice and holiday pay entitlement. On 19 June, Mr Meaker presented a claim of unfair dismissal.

The employer argued that the letter terminated Mr Meaker’s employment from 7 February – which was important because, if that was right, then the unfair dismissal claim which Mr Meaker submitted would be out of time. Mr Meaker argued that the letter was merely a without prejudice offer of settlement, which he rejected, and so it could not have terminated his employment.

A tribunal held a preliminary hearing to consider whether the claim was presented in time (three months from the effective date of termination (EDT)) It considered that the ‘without prejudice’ letter was an effective dismissal letter (resulting in the claim being out of time). Mr Meaker appealed.

EAT decision

The appeal was dismissed.

The EDT was the date of the summary dismissal, even in circumstances where the dismissal was a breach of contract. It was not necessary for Mr Meaker to ‘accept’ the breach for the termination to be effective.

As regards the 7 February letter, its construction was a question of fact for the tribunal. While an employer would normally convey ‘open’ and ‘without prejudice’ communications in separate documents, here the tribunal said that the dismissal wording and settlement agreement offer could be read as separate parts of the same document.

Whilst the letter wrongly referred to a mutual agreement to terminate Mr Meaker’s employment, this did not undermine its clear and unambiguous wording. The letter confirmed that Mr Meaker’s employment was to terminate on the stated date and set out the payments Mr Meaker would receive because of the termination. Although it was marked ‘without prejudice’ the tribunal had been entitled to read it as having an open section, which set out the termination arrangements, and a second ‘without prejudice’ section, concerning the settlement agreement.

Comment

As this case turned on its own facts then it is important that this is not relied upon as a principle and that notice of termination is sent in open correspondence.

However, it is also a useful reminder of an important point about time limits in breach of contract claims. The case of Geys v Société Générale confirmed that the innocent party in a breach of contract did not have to accept a breach and can continue to claim that the contract still exists. However, for the purposes of time limited deadlines such as tribunal claims, the claim would still have to be submitted within three months less a day of the alleged termination, even if in breach of contract, and submitted purely on the basis of protecting the client’s position.