In Meaker v Cyxtera Technology UK Ltd  EAT 17, the Employment Appeal Tribunal (EAT) has upheld an employment tribunal decision finding that a “without prejudice” letter to an employee was an effective dismissal letter despite it erroneously stating that the termination of employment was by mutual agreement and that the correspondence was “without prejudice”. The effective date of termination (EDT) was held to be the date as stated in the letter, resulting in the employee's claim for unfair dismissal being out of time.
An employee must show they have been “dismissed” to be able to bring a claim for unfair dismissal under the Employment Rights Act 1996 (ERA). Dismissal occurs where the employment contract is terminated by the employer.
An unfair dismissal claim usually needs to be brought within three months of the EDT, though there is discretion for the tribunal to extend this time period if it is satisfied that it was not reasonably practicable for the claim to have been presented in time. Section 97(1)(b) ERA provides that where an employee’s employment contract is terminated without notice, the EDT is the date on which termination takes effect.
Facts of the case
The claimant (M) suffered back injuries and was off work for an extended period of time.
In January 2020, Cyxtera’s HR Manager verbally advised M that the company was considering the possibility of terminating his employment, including the possibility of a settlement agreement.
M subsequently received a letter from Cyxtera on 5 February which was headed “without prejudice”, stating that M’s last day of employment was mutually agreed to be 7 February (with payment being made of any amounts of holiday pay and payment in lieu of notice due up to that date). This letter also included a settlement agreement which detailed Cyxtera’s offer of an ex-gratia payment, subject to M signing the settlement agreement.
M did not accept the termination of his employment and brought a claim for unfair dismissal on 19 June. This claim would be out of time if the EDT was 7 February.
The tribunal dismissed M’s claim at a preliminary hearing. The EDT was held to be 7 February and M had not shown that it had not been reasonably practicable for him to have presented his claim in time. M appealed, contending that the letter did not properly dismiss him, and even if it did, the decision on the EDT being 7 February was incorrect.
The EAT dismissed M’s appeal, finding that M’s employment had terminated on the date of receiving the “without prejudice” letter. The letter had set out that Cyxtera had intended to terminate M’s employment with effect on 7 February. They emphasised the difference between the EDT and the contractual date of termination, noting that there can be circumstances where the employment contract is terminated from an unfair dismissal perspective, even if the employment contract would continue under contract law.
Interestingly, it was also found that, although the letter was headed “without prejudice”, it had only been the ex-gratia payment conditional upon M signing the settlement agreement, not the termination which was covered by the “without prejudice” umbrella.
What can employers learn from this?
This decision emphasises the importance of ensuring that “open” and “without prejudice” correspondence is kept separate. There had clearly been confusion arising in this decision from both elements being in one document – in this case, the EDT being the date in the “without prejudice” letter was beneficial because the claim was raised out of time. However, this could be problematic for employers if they were to send a “without prejudice” letter proposing a termination but did not intend it to be effective unless and until a settlement agreement is signed. It also sets out the importance of being aware of the time limits to raise claims at the employment tribunal.
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This article was co-written by Daniel Cormack, Trainee Solicitor.