Dismissal by mistake is still a dismissal

There are often concerns about whether a dismissal has taken place when ambiguous words have been used and/or where the dismissal has been retracted quickly.

In a recent case an employee of some 18 years was told that the company was experiencing financial difficulties and it was suggested, to avoid redundancies, that the staff should become self-employed, receiving a retainer and commission. The employee wrote to the company and asked for written details of the scheme in order to make a decision. The employee received a letter which contained an agency agreement which would move her to self-employed status. The covering letter stated that this was by mutual agreement and that her contract of employment would terminate. A couple of days later the employee telephoned the company and said that she did not accept the agreement and was treating herself as dismissed. The company telephoned her to say that there was a misunderstanding and that if she did not wish to move to self-employment she could continue in employment. This was confirmed in a letter a few days later.

Although the employment tribunal held that there was not a dismissal because there were ‘special circumstances’ which meant that the dismissal did not take effect, when the employee appealed the employment appeal tribunal (EAT) stated that the special circumstances did not apply in this case. The EAT stated that the special circumstances argument would be rare and a tribunal should be slow to accept special circumstances exist except for a heat of the moment resignation or dismissal.

Employers should be very careful when drafting letters to employees and where employers are negotiating an agreed termination it is important to keep a detailed written record of what has been agreed at every stage of the negotiations, and confirm this with the employee.

Employers should proceed with extreme caution as it is often difficult to persuade a tribunal that an employee has accepted a ‘mutual termination’ of employment because of the inequality of bargaining positions between the parties.