In Meaker v Cyxtera Technology UK Ltd the EAT held that a ‘without prejudice’ letter to an employee was an effective dismissal letter despite it stating that the termination of employment was by mutual agreement, which was not the case, and it not being in accordance with the contract.
Mr Meaker was employed by Cyxtera Technology UK Ltd (Cyxtera) in a manual role. Due to back injuries, his ability to do the manual work required in his role became limited. An application for income protection payments was submitted but it was unsuccessful, following which Mr Meaker was advised that Cyxtera was considering terminating his employment and the possibility of a settlement agreement was raised.
Mr Meaker subsequently received a letter from Cyxtera headed “without prejudice”, stating that his employment was being terminated by mutual agreement by reason of capability, his last day would be 7 February 2020 and he would receive payment in lieu of his notice period (which was paid on 14 February). Enclosed with the letter was a settlement agreement detailing Cyxtera’s offer of an ex-gratia payment, subject to him entering into the agreement. Mr Meaker wrote to Cyxtera on 14 February 2020 stating that he did not accept the termination of his employment.
Mr Meaker brought an unfair dismissal claim on 19 June 2020. Cyxtera argued that this was out of time as his employment terminated on 7 February 2020. A preliminary hearing took place and the Tribunal dismissed the claim as out of time on the basis that the letter marked ‘without prejudice’ was an effective letter of dismissal and his employment terminated on 7 February (the effective date of dismissal (EDT)) as Cyxtera had claimed.
Mr Meaker appealed the decision arguing that the letter from Cyxtera had not properly dismissed him but if it had, the EDT was not 7 February, but a week later when he was paid in lieu of notice in accordance with his contract. This was because a termination on 7 February would be a breach of contract as it did not give notice in accordance with his contract of employment, and whilst the contract provided for the possibility of a payment in lieu, this was not made at that time.
The Employment Appeal Tribunal (EAT) dismissed the appeal, finding that the employment terminated on the date of receipt of the ‘without prejudice’ letter, as it had set out that Cyxtera had decided to terminate Mr Meaker’s employment with effect on 7 February 2020. Although the letter was headed ‘without prejudice’ it had only been the ex-gratia payment that was conditional upon Mr Meaker signing the settlement agreement, not the termination. Even though the letter had erred in noting that the termination was by mutual agreement, it had been clear that Meaker’s last day would be 7 February 2020. In relation to Mr Meaker’s argument that he did not receive the proper notice under his contract, the EAT noted the previous case law that the EDT is different from the contractual date of termination and in particular that contract law principles do not impact the EDT.
This case confirms that there can be different termination dates for statutory purposes and contractual purposes. This is something employers will need to be mindful of when considering time limits and whether claims have been brought in time.
In addition, it is important to note that whilst in this case the letter marked ‘without prejudice’ referring to a mutual termination rather than a dismissal was accepted as validly ending employment, it would always be preferable for open and without prejudice correspondence to be separate to avoid confusion. On the facts of this case the employer wanted to be able to use the letter to establish dismissal despite it being marked without prejudice however we consider the principle could also work against employers. This would be in a case where an employer may send a without prejudice letter proposing a termination but did not intend it to be effective unless and until a settlement agreement is signed.
If you require further information on effective dismissals, please contact a member of the Employment Team.