This month we explore a recent Employment Appeal Tribunal case relating to the termination of employment by mutual agreement despite the employee receiving a dismissal letter. We also explore a recent Employment Tribunal case where it was held that an employee was entitled to a statutory redundancy payment where the employee changed their mind after previously unreasonably refusing an offer of suitable alternative employment. We also discuss new statutory rights for workers under the Workers (Predictable Terms and Conditions) Act 2023, which received Royal Assent on 19 September 2023.
1. Employment terminated by mutual agreement despite dismissal letter.
In Riley v Direct Line Insurance Group plc, the Employment Appeal Tribunal held that the Employment Tribunal was entitled to reject an employee’s unfair dismissal claim on the basis that his employment was terminated by mutual agreement rather than dismissal.
- The claimant had autism spectrum disorder, anxiety and depression. He was employed by the respondent from March 2012 and was enrolled on the respondent’s private health insurance scheme, which offered support until retirement in the event of incapacity.
- The claimant was absent from work from 2014 to October 2017 due to anxiety and depression. During this time, he was paid 80% of his base salary under the scheme. The claimant was absent again in May 2018.
- The respondent held a meeting with the claimant in August 2018 and provided the claimant with the option of ceasing employment and instead continue to receive payments under the scheme. The claimant agreed, but queried whether payments would be made up to his retirement age. The respondent confirmed that payments would be made until the state pension age.
- A final meeting took place on 19 September 2018 where the claimant’s termination of employment was confirmed. The respondent sent the claimant a letter on 25 September confirming that he was dismissed with effect from 19 September 2018 on the grounds of capability due to ill health.
- The claimant brought various claims in the Employment Tribunal, including unfair dismissal and a failure to make reasonable adjustments.
- The Employment Tribunal dismissed the claims and held there had been no dismissal within the meaning of section 95(1)(a) of the Employment Rights Act 1996 as the termination of the claimant’s employment was mutually agreed on 19 September 2018. The Employment Tribunal further found the claimant had made an informed decision to pursue the option under the scheme and no pressure was placed on him.
- The claimant appealed to the Employment Appeal Tribunal, arguing that the Employment Tribunal had wrongly rejected the unfair dismissal claim on the basis that his employment had been terminated by mutual consent.
Employment Appeal Tribunal Findings
- The Employment Appeal Tribunal dismissed the appeal. It found that the Employment Tribunal had been entitled to find a mutual termination despite the subsequent dismissal letter.
- This is a fact-specific decision but serves as a useful reminder of the distinction between mutually agreed termination and a dismissal in law. In circumstances where employment is terminated through mutual agreement, employers should clearly document the decision. Depending on the circumstances, it may be sensible to record terms in a settlement agreement.
2. Redundancy payment not restored if an employee changes their mind about previously refusing suitable alternative employment.
In Love v M B Farm Produce, the Employment Tribunal held that entitlement to a statutory redundancy payment is not restored if an employee changes their mind after previously unreasonably refusing an offer of suitable alternative employment.
- The claimant worked at a farm shop and was at risk of redundancy as the shop was due to be closed.
- Her employer offered her an alternative role at another farm shop, subject to a trial period. The claimant said she was worried about driving to an unfamiliar place. Her employer therefore offered to pay her reasonable fuel expenses and confirmed she would not be required to drive in the snow if it was too risky.
- The claimant rejected the offer on the basis that she was not a confident driver. Her employer considered that the role was suitable, and her refusal was unreasonable, and therefore confirmed she would not be entitled to a statutory redundancy payment.
- The claimant subsequently requested a meeting with her employer in which she stated she was interested in at least commencing a trial period for the alternative role. However, her employer confirmed her redundancy and reiterated she was not entitled to a redundancy payment.
- The claimant brought a claim in the Employment Tribunal for statutory redundancy payment and unfair dismissal.
Employment Appeal Tribunal Findings
- The Employment Tribunal found that the role offered was suitable and that the claimant’s refusal was unreasonable. Noting that section 141 of the Employment Rights Act 1996 does not provide for a situation in which an employee changes their mind, and not having been able to find case law on the issue, the Employment Tribunal applied the words of the statute to find that payment is lost if a suitable position has been offered and has been unreasonably refused. Although the claimant later sought to change her decision, the Employment Tribunal did not see a reason to restore the right to a redundancy payment.
- The Employment Tribunal upheld the unfair dismissal claim on the basis that it was not reasonable for the claimant’s employer to refuse to allow her to commence the trial period. Indeed, when the claimant met with her employer, the alternative role was vacant, the role had previously been offered to her and she was at risk of redundancy.
- The case serves as a useful reminder that the obligation to consult and consider alternative employment must be fully explored and continues throughout the employee’s notice period.
3. New statutory right for workers to request a more predictable working pattern.
The Workers (Predictable Terms and Conditions) Act 2023 has received Royal Assent and is expected to come into force in September 2024. It will give atypical workers, such as those on zero-hours or temporary contracts, the right to request a more predictable working pattern.
The key points to note are:
- The right will apply to:
provided they have been employed by the same employer at some point during the month immediately leading into a “prescribed period”, which ends with the application. The act will set the “prescribed period” – but it is anticipated to be 26 weeks.
- Workers whose existing working patterns lack certainty in terms of the hours or times they work;
- Workers on fixed-term contracts of 12 months or less (who are able to request a longer fixed-term or the removal of any provisions relating to fixed-term);
- Agency workers (who can make their request either to the agency or the hirer provided they meet qualifying conditions),
- The application must specify the change being applied for and the date it should take effect.
- A maximum of two statutory requests can be made during any 12-month period.
- Employers will be required to deal with requests in a reasonable manner and notify the worker of a decision within one month.
- An application may only be rejected for the following reasons:
- Burden of additional costs
- Detrimental effect on ability to meet customer demand.
- Detrimental impact on the recruitment of staff.
- Detrimental impact on other aspects of the employer’s business.
- Insufficiency of work during the periods the worker proposes to work.
- Planned structural changes.
- Other grounds as the Secretary of State may specify by regulations.
A worker will be able to bring a claim relating to the employer’s procedural failings and/or if they suffer a detriment or are dismissed because of their request. A worker who succeeds will be entitled to compensation based on a number of weeks’ pay - the number of weeks has yet to be specified.
The measures in the act and the secondary legislation are expected to come into force about one year after the date of Royal Assent, which will ensure that employers have time to prepare. Acas is producing a new Code of Practice to provide guidance on how to make and handle requests for a more predictable working pattern. The code should be available in the coming weeks.