Employer could not withdraw dismissal

The Court of Appeal has recently ruled that an employer who had dismissed an employee could not later withdraw that dismissal.

CF Capital (CFC) wanted to cut costs without having to make staff redundant and asked the sales team whether anyone would consider becoming a self-employed contractor rather than an employee. They would be paid a monthly retainer plus a percentage of any sales they made.

Ms Willoughby, an account manager, met with her line manager on 1 December 2008, saying that she was interested in working as a self-employed contractor but only if she received full details of the proposal. Three weeks later she still hadn’t received the details.

On 22 December, Ms Willoughby’s line manager wrote to her saying that she would begin working as a self-employed contractor from 1 January 2009.  The letter stated: “The termination of your existing employment contract will be effective from 31 December 2008.”

Ms Willoughby told her employer that she did not accept the move to self-employed status. Her manager tried to reassure her twice that there had been a misunderstanding and that, if she wished, her employment for CFC could carry on as before.

However, Ms Willoughby brought a claim for unfair dismissal.  CFC denied that Ms Willoughby had been dismissed and argued that she had in fact resigned. 

The Employment Tribunal held that the letter of 22 December on its own might have constituted a dismissal, but that there were 'special circumstances' because CFC had made a mistake and had withdrawn the dismissal as soon as it could.  The Tribunal dismissed Ms Willoughby’s claim.

However, on appeal, the EAT held that Ms Willoughby was entitled to take CFC’s letter at face value, and added that the termination of her contract was not a mistake because this is precisely what CFC had intended.  CFC should not have assumed that Ms Willoughby had agreed to be re-engaged as a self-employed contractor, but this did not affect the validity of the termination itself.

The Court of Appeal has now upheld the EAT’s decision that Ms Willoughby had been dismissed by CFC.   An Employment Tribunal will decide whether the dismissal was unfair at a later date.

Sam Greenhalgh, an Employment Solicitor at Steeles Law, commented:

“The general rule is that a notice of dismissal cannot be unilaterally retracted.  If an employer uses unambiguous words of dismissal to an employee, then the employee will be dismissed and the employment contract terminated.  The same principle applies when an employee uses unambiguous words of resignation towards their employer.

“The only ‘special circumstances’ that can allow an employer to withdraw a dismissal are words uttered in the heat of the moment and soon retracted.  Allowances are made for words of anger because they usually represent a temporary and irrational intention on the speaker’s part.

“Employers should also avoid any misunderstandings with employees by confirming in writing the outcomes of all discussions and meetings relating to the employee’s contract, so that both parties know precisely where they stand.”