A recent Employment Tribunal Appeal (‘EAT’) case demonstrated the potential for dismissal-related claims to arise even when an employer believes they have agreed to termination by mutual consent. How can employers protect themselves against the potential of such liabilities arising in similar circumstances?
An employee of Direct Line brought a claim for, amongst other things, unfair dismissal and discriminatory dismissal, asserting that he had been ‘tricked’ into agreeing to the terms of a permanent health insurance scheme, the implication of which he claimed not to have understood: the termination of his employment.
The claimant had Autism Spectrum Disorder, which, combined with periods of anxiety and depression, resulted in him being absent from work for a period of two to three years. Direct Line worked with the claimant (including making a series of reasonable adjustments) to enable him to return to work. However, this was unsuccessful and ultimately a medical assessment indicated that the claimant would never be able to return to work.
Following this, Direct Line informed the claimant of a scheme (provided by their health insurance provider) that would cover his salary in the event of incapacity. Ultimately, the claimant agreed to enter this scheme, and this resulted in his employment being terminated. The employer then sent him a letter mistakenly describing the claimant as having been ‘dismissed’ on grounds of capability. This in part formed the basis upon which the claimant later sought to assert that he had, in fact, been dismissed.
Key to this case was the concept of ‘freely given mutual consent’. The EAT stressed the importance of looking at ‘the substance of the matter and not the words used’. It was held that the claimant had not been ‘tricked’ into entering into the scheme and there was nothing to suggest deceitful or coercive behaviour on the part of the employer. The parties had engaged in a process of negotiation and discussion, and there was sufficient opportunity for the claimant to seek legal advice. Moreover, the claimant’s participation (e.g. raising specific queries directly with the insurer) demonstrated that he proactively pursued the scheme, agreeing to the termination of his employment ‘because he wanted to take advantage of it’.
Key facts in coming to this conclusion included:-
- Upon being initially informed about the insurance scheme, the employer had explained its implications with regards to termination of the claimant’s employment.
- In subsequent emails, the employer stressed the need for the claimant to make an informed decision, once more making clear that acceptance would result in the termination of the claimant’s employment.
- The employer understood that the claimant had spoken directly with the insurance provider as to the practicalities of receiving payments post-termination of employment – indicating awareness of the consequences of the scheme upon his employment.
- At the final meeting formally terminating his employment, the claimant stated that he understood the situation and requested confirmation of termination in writing.
Taking into account the wider context, the fact that the employer’s subsequent letter incorrectly referred to the claimant as having been ‘dismissed’ was held not to have been a ‘dismissal’ and the EAT agreed with the Employment Tribunal that the claimant had not been dismissed.
This case is a reminder to keep detailed records during any processes carried out. Here, the existence of minutes of meetings, email records and evidence that showed that the claimant was made aware that his employment would end (if he agreed to the terms of the health insurance scheme) were key to the employer successfully defending this claim.
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Posted on September 19, 2023
