Employment Law Update – March 2023

Welcome to our latest employment law update bringing you up to speed with this month’s key cases and developments.

In this month’s update, we look at cases highlighting the importance of the wording of a termination letter and the need for a Tribunal to ensure that sanctions for non-compliance remain proportionate. We also highlight some issues to consider if an organisation is considering trialling a four-day week.

• Letter headed “without prejudice” was a valid termination letter
• “Unless Order” was too punitive
• Four day working week

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Letter headed “without prejudice” was a valid termination letter

In the case of Meaker v Cyxtera Technology UK Ltd , the Employment Appeal Tribunal made a decision that is a useful reminder about the importance of the precise wording of termination letters and settlement agreement proposals.

Mr Meaker had suffered back injuries and was absent for an extended period. A conversation was held with HR in which he was told that the employer was considering terminating his employment and the possibility of a settlement agreement was raised.

On 5 February 2020, the employer sent him a letter headed “without prejudice”.  The letter stated, amongst other things:

“We have agreed that your employment with the Company will terminate by mutual agreement by reason of capability…..  Your last day of employment will be 7/2/2020 and you will be paid up to that day in the usual way….we will make a payment in lieu of notice……..In addition, as a gesture of goodwill, we will offer you an ex gratia payment as compensation for the termination of your employment, subject to your signature of a settlement agreement.” A settlement agreement was attached.

No settlement agreement was reached and a payment in lieu of notice was made on 14 February 2020.

When Mr Meaker brought a claim for unfair dismissal, the employer defended the claim on the basis that it had been brought out of time as they asserted that his termination date was 7 February 2020 (the date that he received the above letter). If the termination date was 7 February 2020, his claim was out of time. If the termination date was 14 February 2020, the date of the payment in lieu of notice, his claim was in time. The Tribunal held that his employment terminated on 7 February 2020.

The EAT did not consider that the Tribunal’s decision was perverse and therefore upheld the decision that Mr Meaker’s employment terminated, for the purposes of an unfair dismissal claim, on 7 February 2020, finding that:

• The terms of the letter had been considered by the Tribunal to be clear and unambiguous communication of termination on 7 February 2020
• Notwithstanding that the letter was headed “without prejudice”, the first part of the letter was deemed to be an open communication confirming the termination of employment on 7 February 2020. The offered ex-gratia payment was conditional on signing a settlement agreement, but the termination of employment on 7 February 2020 was not conditional on signing a settlement agreement and was therefore an effective termination.

In this case, it was to the employer’s advantage to argue that the termination date was 7 February 2020 as that rendered the claim out of time.  Had the claim been brought within time, then the dismissal on 7 February 2020 may well have been an unfair dismissal as there was no fair process followed and Mr Meaker did not consider that he had agreed to his termination. In those circumstances, the employer might have wanted to argue the contrary and that the letter was not a termination letter, but merely the offer of a settlement agreement.

This case demonstrates the importance of being very clear in any communication offering a settlement agreement.  If an employer wants to make the termination itself conditional on entering into a settlement agreement (as will often be the case) it should use clear wording to do so.

 

“Unless Order” was too punitive

In cases where a party is failing to comply with Tribunal directions, the other party can apply for (or the Tribunal can of its own volition make) an “Unless Order”. Typically, an Unless Order will state that unless the party complies with a direction by a certain date, a claim or response will be struck out.

In Mohammed v Guy’s and St Thomas’ NHS Foundation Trust, the Employment Appeal Tribunal recently addressed the thought process that an Employment Tribunal should follow when making an Unless Order in the context of a claim that included multiple complaints.

Ms Mohammed brought a claim which included complaints of race and disability discrimination.  She was originally represented by solicitors, but subsequently, acted on her own.  There had been efforts to have Ms Mohammed identify and particularise her disability discrimination claims, but without success.  The Tribunal eventually ordered that she provide further and better particulars of her claims of direct disability discrimination and discrimination arising from disability and that unless she complied with the order within 7 days, her claim would be struck out in its entirety.  She failed to comply with the order and her whole claim (including her complaints of race discrimination) was struck out.

Ms Mohammed appealed to the EAT and the EAT upheld her appeal.  The EAT considered that the Tribunal should have limited the strike-out sanction for a breach of the Unless Order to only those elements of her claim that had not been sufficiently particularised.  The draconian nature of a strike-out was such that striking out all of the claims without considering a more proportionate sanction was an error of law.

Parties faced with un-cooperative opponents often seek Unless Orders and this case is a useful reminder that, as with other matters in the Tribunal, seeking Unless Orders should be done in a way that is proportionate to the default of the other party.  This is because a proportionate order is (a) more likely to be granted and (b) less likely to be overturned on appeal.

 

Four day working week

A report from 4 day Week Global (The 4 Day Week UK Pilot Programme Results — 4 Day Week Global) has been published indicating that of the 61 participating companies, 56 have extended their trial and 18 have made the change permanent.

Whilst not necessarily suitable for every business, the concept of a four-day working week is gathering some traction and, for those employers thinking of running a trial, we offer a reminder of issues to consider:

• Define the four-day week: be clear as to the hours involved
• Update contracts of employment if changes are permanent.
• If it is at the trial stage, have clear communication to that effect and be clear as to when the trail ends (and what happens at the end of the trial)
• Consider any impact on holiday entitlement
• Be clear about the objectives of any change/trial and set clear performance expectations

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The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.