Dismissal

by Kate Russell

Other forms of termination of contract

There are several other ways of terminating a contract, each of which may be construed as unfair dismissal if you fail to follow the correct procedures or behave appropriately.

Resignation

Once an employee has resigned and an employer has accepted that resignation, the employee cannot unilaterally withdraw it. Resignations do not have to be in writing, but it’s good practice to ask the employee to confirm a resignation in writing.

However in some cases you should proceed with caution.

Heat of the Moment Resignations

If an employee tells you that he is resigning and it’s in the heat of the moment, it may not be clear whether he actually means it or is just ‘sounding off’. Give the employee the opportunity to reconsider and if appropriate withdraw his resignation once he has cooled down. Put this in writing, so that you can evidence the fact that you did give the employee time to reconsider, in the event of a later dispute.

When is a resignation not a resignation?

An employee handing in his notice may not amount to an unambiguous act of resignation.

Example

In Levy v East Kent Hospitals University NHS Foundation Trust [2018] a worker who announced she was leaving her current role and moving departments with an ambiguously worded letter had not resigned.

Ms Levy worked in the Trust’s records department. She applied for a position in radiology within the same trust and discovered this had been approved, subject to pre-engagement checks, in June 2016.

The following day, Ms Levy handed in a letter to her manager, which stated: “Please accept one month’s notice from the above date”.

Her manager replied the same day, saying he accepted Levy’s notice of resignation and stating her last date.

Six days later, Ms Levy learned that radiology had withdrawn the job offer. She phoned her HR team the same day about taking back her resignation and was told this was at the discretion of her manager. She then approached her manager, who in turn contacted HR, explaining that he understood the unofficial reason for the offer being withdrawn was Ms Levy’s sickness absence.

The next day, HR advised the manager that he was not obliged to allow Ms Levy to retract her resignation. After discussing the matter with his line manager, he decided not to allow her to do so. Her employment ended in July 2016. Ms Levy complained successfully she had been directly dismissed.

The Foundation Trust appealed, but the EAT dismissed the appeal. Although the EAT acknowledged that giving notice could usually be taken as notice to leave the employer, Levy’s circumstances were not typical, in that she was taking up an offer in another department and she was not specific about who she intended to leave.

Do not pressure an employee into resigning as this may amount to an actual dismissal.

Example

B had been given a disciplinary warning. She was subsequently summoned to another meeting to review her performance. MHS said that, if there were any further incidents of misconduct or poor performance, she would be dismissed. The employer pointed out that it would not be in her interests to have a dismissal on her CV and offered her the opportunity to resign on favourable terms. The employee subsequently resigned and brought a claim of constructive unfair dismissal in the employment tribunal. The EAT upheld the employee’s appeal and found that, in the circumstances, the suggestion that the employee resign was clearly a ‘vote of no confidence’ in the employee.

Mutual agreement

The mutual consent of both parties can bring an employment contract to an end without there being a dismissal in law.

Tread very carefully here as tribunals are very wary of accepting this option and will expect to see clear evidence that the agreement was in fact mutual.

Frustration

An employment contract may be frustrated where some event occurs which was not envisaged by the parties at the time the contract was entered into, and which makes the contract impossible to perform or radically different from that originally contemplated. Frustration will automatically end the contract. There’s no dismissal and so no need for notice to be given by either party.

Note that tribunals are extremely reluctant to find that a contract has been frustrated.

Apart from death (of employer or employee), the following are examples of situations which could lead to discharge of an employment contract by frustration:

  • Illness (although this will normally have to be long and serious to result in frustration of the contract)
  • Imprisonment (although this will normally have to be long in relation to the employee’s length of service to result in frustration of the contract)
  • Internment
  • A change in the law.

Where prison is concerned, staff sentenced to relatively short terms may be able to argue that there is no frustration if the employment contract allows for other absences of a similar duration, such as for long-term sickness. Where an employee has been bailed, this will not necessarily amount to a frustrating event – it is the conviction that is important.

Where illness is concerned, it must be a really serious condition (permanent incapacity) with no prospect of recovery.

There is no dismissal if an employment comes to an end by reason of frustration of contract and hence the ex-employee can have neither a right to unfair dismissal compensation nor to redundancy pay (subject to the statutory exception for redundancy pay if the contract has been ‘frustrated’ by the death of the employer).