How not to write a dismissal letter

A recent decision from the Employment Appeal Tribunal shows how important it is to be clear when writing a letter terminating someone’s employment. In this case the employer, presumably in attempt to soften the blow, combined a letter of dismissal with a “without prejudice offer” of an ex gratia payment.

That lead to a dispute about when the effective date of termination (“EDT”) occurred for unfair dismissal purposes. The claimant had been on sick leave for an extended period. He had been in contact with his HR manager about the possibility of his employment being brought to an end, but no decision had been reached. He then received a letter, marked “without prejudice”, which referred to his employment ending “by mutual agreement”. It said that his last day of employment would be 7 February 2020 (the date he received the letter) and that he would be paid up to that date. It added that he would also receive notice pay, payment for accrued holiday entitlement and his P45. The letter concluded by offering him a further sum in return for signing a settlement agreement, a draft of which was enclosed.

The employment tribunal decided that despite being marked without prejudice and referring – incorrectly – to termination by mutual agreement, the letter was still sufficiently clear to dismiss the claimant on 7 February. That meant that the EDT (the date the time limit for bringing unfair dismissal proceedings started to run) was 7 February. The claimant had assumed the EDT was a week later, when he received his P45. As a result he submitted his claim out of time.

The EAT has endorsed the tribunal’s reasoning and explained why it did not make any difference that the claimant could have kept his employment contract alive for a little longer by refusing to “accept” his summary dismissal. However, the broader lesson of this case goes beyond technical arguments about time limits. The key point is that you can’t mix an offer to settle a potential unfair dismissal claim with a letter of dismissal: they need to be in separate documents. Failing to do this causes confusion, which is not helpful for either party.

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