Here we list a selection of key cases on dismissal, providing a summary of the decision and implications for employers.

Issue: ‘Without prejudice’

A secretary at a firm of surveyors had been employed for six years. She had worked on a part-time basis, but towards the end of her employment the firm said that part-time working was no longer an option. Discussions about a settlement agreement followed, with letters being marked ‘without prejudice’ referring to the pre-termination discussions that had taken place. Provided that a genuine attempt is being made to settle a dispute, details of such negotiations are normally inadmissible in courts and tribunals.

The secretary then raised a grievance alleging an underlying strategy to bully her out of her job to avoid a financial settlement. In the grievance she referred to the contents of the ‘without prejudice’ letters alleging that the correspondence contained more evidence of threatening and bullying behaviour.

When she resigned and claimed constructive unfair dismissal and sex discrimination were those documents and the fact that discussions had taken place admissible in evidence? The employer argued that they could not be relied upon as they were ‘without prejudice’.

The Employment Appeal Tribunal (EAT) considered the protection under the Employment Rights Act 1996 which prevents protected conversations from being referred to in employment tribunal proceedings for unfair dismissal. The EAT held that the rules do not just prevent the parties from revealing the content of protected conversations, but also prevents disclosure of the fact that the discussions have taken place at all.

Internal communications even referring to settlement discussions will generally be inadmissible in any claim of unfair dismissal.

Interestingly unlike the normal ‘without prejudice’ rules the EAT also held that the protection and privilege under the Act always applies and cannot be waived, even with the agreement of the parties.

The discussions could not therefore be disclosed. However, disclosure can take place if there had been undue influence, harassment, bullying or intimidation. The Acas code of practice on settlement agreements gives examples of such improper behaviour and the case was remitted back to the tribunal to determine if the employer’s conduct was improper and if the discussions were admissible for that reason.

Implications for employers

  • During pre-termination negotiations both the statutory concept of ‘protected conversations’ and the old ‘without prejudice’ rules allow employers and employees to have confidential discussions about ending the employment relationship.

  • As the legislation is relatively recent there has been some uncertainty as to the extent and the scope of pre-termination negotiations and this is the first case decision to provide guidance.

  • While employers have been used to negotiating under the ‘without prejudice’ rule for some time there are fundamental differences between the way that the legislation about protected conversations and the without ‘prejudice’ regime work in practice.

  • The rules on protected conversations only apply to cases of unfair dismissal (including constructive unfair dismissal, but with the exception of automatically unfair dismissal claims).

  • As the protection only applies to proceedings relating to unfair dismissal, where there is an additional claim (e.g. sex discrimination) the employment tribunal would allow the evidence for the additional claim, but not for the unfair dismissal claim.

  • Anything said or written during the pre-termination negotiations can generally not be used against the parties in subsequent tribunal proceedings.

  • The long established rules relating to ‘without prejudice’ communications mean that the parties can waive the protection that would otherwise apply to their discussions if they reveal the contents in non-protected open correspondence.

  • The parties cannot even mention even the existence of pre-termination negotiations in any later litigation.

  • Unlike the rules relating to ‘without prejudice’ communications, the parties cannot waive the privilege that applies to such discussions, even by agreement. The employer or employee should object to any attempts by the other party to refer to protected conversations or ‘without prejudice’ correspondence.

  • Pre-termination discussions are not straightforward and the rules must be followed in order to benefit from the protection.

  • The statutory protection will not apply where there is improper behaviour and employers should conduct negotiations carefully as their comments could ultimately be seen by an employment tribunal.

  • The Acas code of practice on settlement agreements should be followed.

Issue: Unfair dismissal

A prison service pharmacist faced allegations of unprofessional and inappropriate misconduct. Following a procedurally defective disciplinary process she was dismissed. One of the procedural failings was that the manager hearing the appeal partially relyied on matters which had not been put to the claimant. The claimant appealed against the dismissal.

According to the Acas Code of practice on disciplinary and grievance procedures, appeals should be dealt with impartially by someone not previously involved in the case, and the non-statutory Acas guidance recommends that the person conducting the appeal should be more senior than the initial disciplinary manager. Here the appeal process was also open to criticism in that:

  • The manager hearing the appeal had been involved in part of the original case against the pharmacist.
  • That manager was also a mentor to one of the victims of the alleged misconduct.
  • The manager was also subordinate to the manager who had conducted the first disciplinary hearing.

The claimant’s dismissal was confirmed and she brought a number of claims (including unfair dismissal). The key question was whether the flawed initial disciplinary process had been corrected by the employer on appeal.

The Employment Appeal Tribunal found that the dismissal was not unfair; the flaws at the first stage of the disciplinary process had been remedied. The mere fact of a manager having had prior dealings with an employee, without something extra which suggested bias, would not make the dismissal unfair.

Implications for employers

  • Employers must always act fairly and reasonably in any disciplinary and grievance procedures.
  • Failure to follow a fair procedure will usually make any subsequent dismissal unfair.
  • The compensation awarded to an employee can be reduced in some circumstances to reflect the fact the dismissal would have happened anyway, if matters had been handled properly.
  • The Acas Code of practice on disciplinary and grievance procedures sets out the basic requirements of fairness and should always be followed. Supplemental Acas guidance is also advisable.
  • Failure to follow the Code itself can increase any award made against employers by up to 25%.
  • Some procedural defects in an initial hearing may be remedied on appeal.
  • If an employer wishes to remedy any procedural defects or omissions, it is sensible to conduct appeals as re-hearings where possible.
  • Many small employers may have problems deciding who should hear an appeal. The only senior managers available may be involved in the events giving rise to the disciplinary matter in the first place.
  • It is sometimes unworkable, especially in smaller organisations, for those senior managers to avoid the disciplinary hearings, although appeals should be dealt with impartially by another manager where possible.
  • Employers should plan who should hear a disciplinary matter and any subsequent appeal from the very outset. The safest course may be to involve an external person or semi retired manager/consultant in the appeal if possible.

[2013] EWCA Civ 1226
Issue: Unfair dismissal – Termination of contract while absent

A delivery driver was on long-term sickness absence after a serious accident at work that resulted in him suffering serious spinal injuries. The employer wrote to him in June 2006, stating that if he did not contact them within a week the employer would assume the driver had terminated his contract of employment.

The employee had, in fact, moved house and the letter was returned unopened. The employer treated the employee as dismissed. Meanwhile a personal injury claim was being pursued. When the driver saw a copy of the letter some three years later he brought a claim for unfair dismissal, disability discrimination, breach of contract (including notice pay and unpaid holiday pay).

The employer argued that there was an implied unilateral termination by the employee. However the Employment Appeal Tribunal held that the employee was not ‘self-dismissed’ by failing to reply to the letter which stated that he would be taken to have resigned unless he contacted the employer. The employer should have attempted to contact the employee via his solicitors when the letter was returned. The contract therefore continued until 2009 and the claims for unfair dismissal and breach of contract were in time, as were the claims for disability discrimination and holiday pay claims which were continuing acts in any event.

Implications for employers

  • Employment contracts must be clearly terminated.
  • There must be actual communication with the employee concerning termination.
  • Employers may consider hand delivery of relevant communications, or if electronic means are used, at the very least read receipts.
  • Employers must not rely on an employee taking certain actions, failing which they will be taken as having resigned.
  • Silence will not be effective in terminating a contract of employment.
  • An unterminated contract can have very undesirable consequences for the employer. Employees may continue to be entitled to pay, holiday pay or other benefits.
  • Employers must be clear and unambiguous in their communication with employees at all times.
  • If handled differently the employer may have been able to communicate to the employee that the contract had been frustrated in any event.
​Issue: Jurisdiction (legal test for whether foreign nationals can bring unfair dismissal and whistleblowing claims)

The claimant was a US employee of a US company who was paid in US dollars. He worked about half his time in the UK (managing the UK and Abu Dhabi businesses) and the rest in the US. He got a daily allowance for each day spent in the UK. Employment contracts should always expressly state which country’s legal system applies to the relationship, but this one did not. There was a clause in the contract saying that all disputes would be dealt with under the rules of the American Arbitration Association. The claimant was on numerous US boards and committees of the employer company. When in London he lived in rented accommodation paid for by the employer. He had furniture and home effects in Texas where he and his partner lived.

The employer introduced a permanent local Chief Executive Officer to head the UK business. While he was in the US the claimant’s UK secondment was ended, followed by a redundancy dismissal. He claimed unfair dismissal for whistleblowing, and sexual orientation discrimination under the Equality Act 2010. The issue was whether the UK employment tribunal had jurisdiction to consider his claims, or whether it was a matter for the relevant state in the US.

The Employment Appeal Tribunal decided the strongest connection of the employment contract was to the US. It held that neither UK or EU law was engaged and the employment relationship was an American relationship.

Implications for employers

  • Employers should ensure that all contracts of employment have a ‘choice of law’ clause which clearly specifies which legal system applies to the contract.
  • Employers should ensure that all contracts of employment have a choice of jurisdiction clause which clearly specifies which legal system has the power to deal with any disputes regarding the contract.
  • The choice of law and jurisdiction often select the same place, but not in all cases.
  • Employers must understand the implications of international postings and secondments.
  • The Employment Rights Act 1996 and the Equality Act 2010 do not have a clear statement of their territorial scope. The courts and tribunals therefore are left decide which sorts of employees are entitled to protection and which are not.
  • Where UK nationals are working in the EU, the UK courts should seek to allow employees to pursue any rights deriving from EU Directives, for example paid holiday and anti-discrimination rights.
  • Generally an employee must show a sufficiently strong connection to the UK and that the connection is stronger than with any other jurisdiction.
  • Different issues can arise with UK nationals working overseas and overseas nationals working in the UK.
  • The House of Lords decision in Serco Ltd v Lawson (2006) states which employees are governed by UK employment law. This includes:
    • those employees who ordinarily work in the UK
    • ‘peripatetic employees’ who are based in the UK, but travel internationally on their employer’s behalf, and
    • expatriates who can show a close connection to the UK.
  • An employee’s base therefore depends on a number of factors such as home residence, pay and tax and application of contractual terms.
  • Ordinarily, working in the UK at the time of dismissal is an indication that that the employee falls within UK employment law. However it is not absolutely definitive. In establishing the strongest connection, numerous factors, including the deliberate intention of both parties, the contractual terms and the workings of the contract in practice will be taken into account.

Issue: Unfair dismissal – without prejudice

An employee was being dismissed for misconduct and entered into negotiations towards a settlement agreement using correspondence marked ‘without prejudice’. In the negotiations the employee also asked for the dismissal to be categorised as a redundancy, which it was not. The negotiations failed and he was dismissed. The employee claimed he was a whistleblower and alleged he was therefore automatically unfairly dismissed for making a protected disclosure.

As part of its defence the employer wanted to reveal the negotiations to the employment tribunal to disprove the whistleblowing allegations and argued that the ‘without prejudice’ correspondence was not really in accordance with the ‘without prejudice’ rule and should be admissible before the tribunal.

The employer tried to say that just because there were negotiations about a settlement agreement did not mean they were in a legal dispute at the time. The Employment Appeal Tribunal (EAT) ruled that there clearly was a legal dispute in existence at the time of the negotiations. Therefore the ‘without prejudice’ rule did apply to the correspondence and it was therefore all inadmissible at the tribunal hearing. The EAT provided some helpful reminders about the ‘without prejudice’ rule.

Implications for employers

  • ‘Without prejudice’ communication can be used to settle claims thereby avoiding litigation.
  • Settlement negotiations which arise where an actual legal dispute already exists (or is imminent) are confidential and cannot be revealed to the court or tribunal unless the parties agree.
  • The ‘without prejudice’ rule arises from case law and enables the parties to be able to negotiate without fear that the communications can later be used by either party as an admission of liability.
  • The use of the words ‘without prejudice’ does not automatically make the communication private. For correspondence between parties to be protected it must be made in a genuine attempt to settle a dispute between the parties.
  • To determine whether there is an actual or potential dispute, a tribunal will consider the context of any correspondence marked ‘without prejudice’, and not simply focus on the labels on the correspondence itself.
  • A party making a ‘without prejudice’ offer reserves the right to assert its original explanation about the dispute if the offer is rejected and litigation proceeds.
  • In this case the discussion about the alternative reasons for the dismissal helped show that there was a present dispute, or the potential for a future dispute, which meant that the ‘without prejudice’ rule applied.
  • The fact that a settlement agreement is being negotiated does not automatically mean that there is an actual or potential dispute between the parties, but that will very often be the case.
  • The facts giving rise to this case were before ‘protected conversations’ were introduced in July 2013 which enable employers to have discussions with employees about ending the employment relationship.
  • However ‘protected conversations’ only apply to potential ordinary unfair dismissal cases. Normal rules about ‘without prejudice’ conversations are the only source of protection for employers in potential discrimination claims and automatically unfair dismissals.
  • Employers should only be assured of protection by the ‘without prejudice’ rule where there is an actual or potential dispute. A complete surprise approach to an employee with a settlement offer will not attract ‘without prejudice’ protection.

Issue: Unfair dismissal – a question over continuity of employment

An employee who worked for an autospray centre was dismissed in July 2008, but in December 2008 he was employed again. He was dismissed again in March 2010 and claimed unfair dismissal. The following month he joined another repair company for nearly four months. In July 2010 he settled his claim against the autospray centre and was re-employed in his old job. In May 2011 he was dismissed yet again due to a reduction in the type of work he did. The employment tribunal had to decide if he had sufficient continuity of employment to claim unfair dismissal again.

The Employment Appeal Tribunal decided that he could have the requisite continuous employment to bring an unfair dismissal claim, even though he had not been employed for continuous year before his dismissal. The Employment Protection (Continuity of Employment) Regulations 1996 specifically state that the period between a dismissal and the reinstatement or re-engagement can count towards the employee’s period of continuous employment. The employee was dismissed and presented a claim of unfair dismissal following the March 2010 dismissal. The matter had to go back to the employment tribunal to decide if he had been reinstated because he had brought the claim of unfair dismissal. The key fact is that working for another employer during the period before the reinstatement did not prevent continuity accruing.

Implications for employers

  • An employee’s continuity of employment may not be broken during a several month gap between an employee’s dismissal and reinstatement in the original job.
  • Even if an employee is dismissed by Employer A then works for Employer B and then returns to Employer A, the requisite continuity may be preserved.
  • It seems curious to an employer that an employee can maintain continuous employment with them at the same time as working for another employer. However the rarely used law on reinstatement specifies that the dismissal is treated as never having occurred.
  • Employers should be aware that if they agree to reinstate an employee, the employee will not go back to square one as far as the accrual of employment rights is concerned.

Issue: Unfair dismissal: Gross misconduct (unauthorised use of taxis)

A postman had travelled to work by getting a lift from passing Royal Mail vans. On one of his days off he was asked to come in, but refused to do so because of transport difficulties.

His line manager gave him the account and PIN of a taxi firm for him to get to work and he started to use the taxi firm, because the van routes changed and getting to work that way became less reliable for him. The taxi firm’s charges were reviewed and the postman was summoned to a formal meeting. He explained that he thought he was authorised to use the taxi service, and offered to repay the money. He was suspended and then dismissed. The disciplinary committee took account of his 19 years of service, but found that he had tried to conceal the extent to which he was using taxis. An employment tribunal, and subsequently the Employment Appeal Tribunal, found that he had been fairly dismissed for gross misconduct, in particular dishonesty and concealing the use of the taxi account.

Implications for employers

  • When authorising employees to incur new expenses managers should do so in writing, making it clear precisely which expenses are allowed, on which occasions and for how long the expenses claims may continue.
  • Employers should have a policy in place governing expenses which is kept under review so that employees know exactly what is expected of them.
  • Employers should also regularly monitor and review expenses claims, warning employees of anything inappropriate and nipping excessive accrual of expenses in the bud at an early stage.
  • The interesting aspect of this case was that the employment tribunal was comprised of the standard panel of three, namely two non-legal members and an employment judge. It was the non-legal lay members who decided that the dismissal was fair (based on their common sense knowledge of what any employee could be expected to know). They over-rode the opinion of the employment judge who wanted to find against the employer and rule that the dismissal was unfair.
  • Following the Employment Tribunals Act 1996 (Tribunal Composition) Order 2012, such straightforward cases can now be dealt with by an employment judge on their own without the lay members. Paradoxically there may be more decisions against employers, with the panel number being reduced to a single judge, especially in straightforward conduct cases.
  • In light of this case, solicitors representing employers should consider asking the tribunal for a full panel in unfair dismissal cases when they can.

[2012] EWCA Civ 410
Issue: Unfair dismissal – retirement

An employee was about to turn 65. His employer informed him in advance that he would be retired on the (then default) retirement age of 65 and also that he had a right to request to continue working beyond this date. The main issue in the case was whether the notification was in accordance with the procedure set out in Schedule 6 to the Employment Equality (Age) Regulations 2006. The employee had put in a written request not to retire, but was eventually dismissed on his 65th birthday. The employee brought a claim for unfair dismissal and age discrimination under the old Employment Equality (Age) Regulations 2006.

The Court of Appeal eventually upheld the decision by the Employment Appeal Tribunal that the employer had not properly informed the employee of his right to request continuing work beyond 65. The statutory retirement notice informing an employee of their right to request not to retire must specifically cite paragraph 5 of Schedule 6 of the Employment Equality (Age) Regulations 2006. The dismissal was unfair, regardless of whether the employees subsequent letter did or did not comply with the age regulations.

Implications for employers

  • The statutory retirement procedure was repealed (subject to transitional arrangements) with effect from 6 April 2011 – therefore this decision is of limited significance for the future.
  • This case does suggests the correct procedure to follow if employers wanted to retire an employee when they reached the old default retirement age.
  • Employers under the old rules should have alerted employees that their request to carry on working had to follow the Age Regulations and they must have directed employees to the specific procedural requirements in these (now repealed) Regulations.
  • However, employers who had already issued notices of retirement before the repeal of the retirement procedure would need to check that their notices were adequate.
  • To avoid doubt, any employers issuing notices under the old procedure should have expressly stated to the employee that the employee should specify that their request is ’made under paragraph 5 of Schedule 6 of the Employment Equality (Age) Regulations 2006.
  • Any employers who had not communicated the statement referred to above to their employees run the risk of their retirement notices being invalid.
  • If an employer is deemed not to have followed the statutory retirement procedure, then the reason for dismissal will not automatically be retirement and the employer will have to prove the reason for dismissal if it reaches a tribunal.

​[2011] EWCA Civ 1115
Issue: Termination of employment – retraction

A sales manager had some discussion with her line manager about the possibility of avoiding redundancies by moving some of the sales team from being direct employees to working on a self-employed basis.

The sales manager said she had expressed an interest in becoming self-employed, but did not believe that she had agreed to this. However her line manager thought she had agreed to the switch. Three weeks after the initial meeting the sales manager received a letter enclosing the agreement for self-employment. The letter said that termination of her existing employment contract would be effective from 31 December 2008. She took legal advice and was told by her solicitor not to return to work after the Christmas break. The line manager telephoned her and tried to reassure her that there had been a misunderstanding and if she did not wish to become self-employed she could go back to her old role.

She did not do this, but claimed wrongful and unfair dismissal.

The employer said that she had resigned rather than been dismissed. Eventually the matter reached the Court of Appeal, which held that the employer had dismissed her and it could not retract clear written words of dismissal which had been accepted by the employee.

Implications for employers

  • A clearly worded letter terminating employment cannot usually be unilaterally retracted by an employer. Exceptions to this are rare.
  • If an employee uses unambiguous words of resignation to the employer they have resigned and thereby terminate the contract of employment.
  • A letter terminating employment can however be retracted with the employee’s agreement. A letter of resignation can also be retracted with the employer’s agreement.
  • There is a ‘special circumstances’ rule which means that even clear words of dismissal do not terminate the employment. The most common example of this is a heat of the moment verbal exchange. In such cases clear words of dismissal may not terminate employment and the employer can unilaterally retract its position within a reasonably short period of time.
  • The special circumstances exception will arise when the purported notice has been given verbally with words that are quickly regretted. Such cases are rare.
Issue: Unfair dismissal – inappropriate use of internet

An employee who worked for a charity which assists drug-users was placed to assist with work in prisons for the Prison Service (HMPS). In his own time, the first employee sent an offensive email from his home computer to a HMPS colleague’s home computer. The email was racist and sexist. The colleague forwarded the email to another colleague on a HMPS work address. The first employee was suspended from working for the HMPS and the second one was ‘allowed’ to retire.

The charity investigated and found that the first employee had committed gross misconduct for having carried out an act which might damage the charity’s reputation or integrity and for having breached the equal opportunities policy. Also, as he had been excluded by HMPS from all their prisons in Yorkshire and Humberside, his employment was no longer viable. The employee was dismissed for gross misconduct. He claimed unfair dismissal and wrongful dismissal. The employer won. It was within the range of reasonable responses for it to consider that forwarding such an email to its largest client might damage its reputation and that this can be an act of misconduct.

Implications for employers

  • Employers must have carefully drafted gross misconduct clauses in their employment contracts and carefully drafted equal opportunities, disciplinary and internet and communications policies. These must all be co-ordinated with respect to gross misconduct.
  • Employers should remind employees what email communication is and is not acceptable.
  • Employers should characterise misconduct correctly, relying on their definitions of gross misconduct and what brings the organisation into disrepute.
  • Employers may be able to dismiss for some acts of misconduct which occur in the privacy of the employee’s own home in their own time, although it is a difficult decision to make. In this case the email was headed ‘It is your duty to pass this on!’ and therefore the employee knew that it was likely to be passed on.
  • Employees may raise Human Rights Act 1998 claims, in particular the right to a private life, but employers can defeat such arguments where emails such as this are clearly not intended to be private.

​[2010] IRLR 1073, SC
Issue: Date of dismissal

An employee was dismissed in a letter which was sent by special delivery and signed for by her son on 30 November 2006. She had been expecting the letter to arrive, but she had to go away for a few days because her sister was giving birth. She did not open the letter and find out about the decision until 4 December 2006. She brought a claim of unfair dismissal on 2 March 2007. If the effective dismissal date was 30 November her claim would be out of time, but if it was 4 December it would be in time.

The Supreme Court held that the effective dismissal date was 4 December when the employee opened the letter. She should not be criticised for letting her letter stay at home unopened instead of getting her son to open it and read it to her, as the contents were private. She had not deliberately failed to open the letter or gone away to avoid reading it and therefore the dismissal date should be 4 December when she found out about the decision. The Supreme Court also held that on policy grounds it was desirable to favour the employee in interpreting time limit provisions and that strict contractual laws concerning contract termination should not displace the statutory framework.

Implications for employers

  • Employers often communicate the final dismissal decision by post or email. This may be easier for all concerned and employers will inevitably continue to do this. However employers should bear in mind that dismissal by post or email has some disadvantages as well.
  • Employers should always remember that to be valid a dismissal has to be communicated.
  • Employers should ensure that the employee has a reasonable opportunity to read letters of dismissal.
  • Dismissals communicated in person can leave less room for ambiguity.
  • In many cases it will not matter as to the precise date of termination but in cases where timing is crucial (for example where the employee is close to attaining the one-year's service for an unfair dismissal claim) then the employer should consider dismissing in person and carefully documenting the meeting by keeping minutes and confirming the dismissal in writing as well.
  • Guidance to the Acas Code of practice on disciplinary and grievance procedures recommends that face-to-face dismissals should be confirmed in writing in any event.

​(unreported, UKEAT/0032/10 27 July 2010, EAT)
Issue: Dismissal - procedures

An employee was believed to have stolen £3,000 from her employer. In a letter of suspension to the employee the allegation was stated as a ‘loss of £3,000’ which could have meant by inefficiency, an innocent mistake or theft.

Subsequent correspondence calling her to a disciplinary hearing led her to believe that she was being accused of theft, but this was never confirmed by the employer. Following the disciplinary hearing she was dismissed and the dismissal letter reiterated the allegation as the reason for her dismissal. She brought a claim of unfair dismissal which was eventually upheld by the Employment Appeal Tribunal who found that the failure to put the allegation of theft to the employee meant that the dismissal was unfair. Money could go missing for a variety of reasons and the employer’s response would vary depending on whether they were accused of inefficiency, negligence or dishonesty. The employee should have had the allegation of theft put clearly to her.

Implications for employers

  • Employers must be as comprehensive and accurate as possible in any disciplinary communication, particularly the initial letter setting out the allegations or the letter inviting them to a disciplinary hearing.
  • Employers should not be embarrassed and try to avoid the true allegation by using ambiguous or vague wording.
  • Particularly if dishonesty is alleged, the employer must make the nature of their allegation very clear to the employee.
  • Disciplinary and grievance policies and indeed employment contracts themselves should clearly explain how offences of dishonesty will be treated.

​Please note: While every care has been taken in compiling these notes, CIPD cannot be held responsible for any errors or omissions. These notes are not intended to be a substitute for specific legal advice.

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