Effective date of termination
Effective date of termination
HR departments are often involved in negotiations about the possible exit of employees. A recent EAT decision demonstrates how important it is to keep track of both the "off the record" and "on the record" conversations.
The EAT has confirmed that the effective date of termination, which is key to establishing whether an unfair dismissal claim has been brought in time, was the date on which the employer sent a letter to the employee stating unequivocally that the employment relationship had ended. It was not the date specified as the termination date in a draft compromise agreement.
Facts Mr Radecki was employed as a teacher at a school run by Kirklees Metropolitan Council. As a result of concerns about his skills, and difficulties with other members of staff, he was suspended with pay. A disciplinary hearing was postponed while a compromise agreement was negotiated. An unsigned draft copy of the agreement, headed "without prejudice" and "subject to contract", stated in the preamble that Mr Radecki's employment would "terminate by mutual consent on 31 October 2006".
The Council removed Mr Radecki from its payroll (with his knowledge) on 31 October 2006. There followed several months of correspondence until, on 22 February 2007, Mr Radecki informed the Council that he was unhappy with the terms of the compromise agreement. The Council wrote to Mr Radecki on 5 March 2007, asserting that it was unable to enter into further discussions because his employment had terminated on 31 October. Shortly afterwards Mr Radecki was sent his P45 which stated that his last day of employment had been 31 October 2006.
Mr Radecki lodged a claim for unfair dismissal on 7 March 2007. However, the tribunal held that it was out of time as the effective date of termination of his employment was 31 October 2006.
EAT Decision The EAT allowed Mr Radecki's appeal. Regardless of the position of the compromise agreement, there was no basis for finding that the employment terminated on 31 October 2006. The compromise agreement was only ever "without prejudice" and "subject to contract" - any agreement in its preamble that the employment should end on 31 October 2006 was always subject to the compromise agreement actually being concluded. It never was.
Mr Radecki's absence, the failure to have a disciplinary meeting and the non-receipt of pay were all explained by his suspension. There was no "sufficiently unequivocal statement" terminating the contract until the letter of 5 March 2007. That was the effective date of termination. The claim was therefore presented in time.
In practice An informal agreement that an employee need not attend work while seeking legal advice during negotiations is not problematic where compromise agreements are signed. However, this case demonstrates what can go wrong when negotiations break down.
Employers need to take care and not fall into a trap of assuming that an agreement will be reached. It is a good idea to communicate a deadline and if negotiations are not concluded within the time limit, to then decide what next steps to take, for example, reconvening a disciplinary meeting.
'Without prejudice' discussions should not automatically stop an employer from communicating about other matters on an open basis, such as the employee being paid or the question of termination of employment.
Radecki v Kirklees Metropolitan Borough Council UKEAT/0114/08/DA