Dismissal effective despite ‘without prejudice’ letter

Discussions with an employee about termination of their employment should be kept separate from negotiations over the terms of any settlement . That is the lesson to take from a ruling handed down by the Employment Appeal Tribunal in a case called Meaker v Cyxtera Technology UK Limited. We’ll consider how employers should go about conducting those discussions.

The facts of this case, briefly. Grant Meaker was employed by CTUK Ltd in a heavy manual night role. He suffered back injuries and was off work for an extended period and it was agreed that his inability to do heavy work was likely to be permanent. The parties held conversations in which the employer indicated that it was considering terminating Mr Meaker's employment and the possibility of entering into a settlement agreement was raised. On 5 February 2020 Meaker received a letter which was headed "without prejudice" stating that it had been agreed that there would be a mutual termination of employment. It stated that his employment would terminate on 7 February 2020. On 7 February Mr Meaker wrote to CTUK Ltd rejecting the settlement offer. On 14 February payment of both the PILON and pay for untaken holiday was received in Meaker's bank account. Meaker subsequently brought an unfair dismissal claim. The central issue was whether the letter was an effective letter of dismissal or whether it was a continuation of the negotiations leaving him free to look for better terms. Ultimately, the case reached the EAT which decided the letter was an effective termination letter since, on the facts, it was sufficiently clear that it was terminating Mr Meaker's employment unilaterally, notwithstanding the letter was headed "without prejudice". In other words, the heading certainly didn’t help the employer’s case, but it wasn’t fatal to the employer’s main argument that the letter was clearly terminating the employment.

So let’s get a view on this. Earlier I spoke to Linda Jones about the case. I asked Linda what she regards as the key lessons for employers to take from it:

Linda Jones: “Well I think the key lesson is that if you're communicating with an employee that they're dismissed, you should put that communication in an open letter and not get it confused with any settlement negotiations that you might be having with the employee. So in this particular case the employer ended up in the Employment Appeal Tribunal trying to argue that a ‘without prejudice’ letter had been effective in terminating the employee's employment and that's not really where anybody wants to end up. So, I think separating the two things out and making sure that you have one set of communications that are about settlement, whether they're headed ‘without prejudice’ or whether they're headed ‘section 111A Employment Rights Act’, and having a completely separate set of communications saying to the employee that their employment has been terminated.”

Joe Glavina: “How should employers go about framing a discussion to best protect themselves.”

Linda Jones: “Well, in the workplace, quite often, you haven't got to the point where you can really have a proper ‘without prejudice’ conversation and that's because for a conversation to be ‘without prejudice’, and therefore something that won't be reported in any subsequent litigation, there has to be a dispute, or a genuine prospect of a dispute. So, if you've got a situation where the employee has already gone to ACAS, for example, and initiated early conciliation then you could probably safely say that there's going to be a dispute there so you could then enter into a ‘without prejudice’ conversation. But on the other hand, if it's simply a situation where you've decided that somebody, for example, is underperforming and you want to start talking to them about what they should leave the business, there's no dispute there so you can't really, in that situation, label that as a ‘without prejudice’ conversation, you'd have to look instead at using a protected conversation under section 111A of the Employment Rights Act.”

Joe Glavina: “Does the mere existence of a grievance necessarily means that there's a dispute for the purposes of the ‘without prejudice’ rule?  

Linda Jones: “I think the mere existence of a grievance doesn't create enough of a dispute for there to be genuine ‘without prejudice’ conversation and that has actually been discussed and established in a number of cases because raising a grievance is part of an employer's normal HR procedures, there’s a grievance there which invites employees who are unhappy about something to raise a grievance and that doesn't necessarily mean that they're going to end up litigating and, in fact, most of them won't end up litigating. So, I think that it's a mistake and can lead to the employer being exposed if they start trying to have a ‘without prejudice’ conversation of the back of a grievance.”

Joe Glavina: “You’ve mentioned section 111A and so-called protected conversations and how they’re useful in cases where there’s no dispute but in the 10 years since that provision came into force, we’ve seen very little case law on the point which makes me think it isn’t used very much by employers. Why is that do you think?” 

Linda Jones: “I think employees find it a bit clunky to be perfectly honest. It’s not really that clear how you set about doing it. There's an ACAS code of practice that sits alongside it that suggests that there has to be a 10 day cooling off period and that there are certain formalities that have to be engaged in if it's to comply with the ACAS code of practice. I think just the terminology - everybody uses the shorthand of ‘protected conversation’ but that's not actually the full terminology used in the legislation so I think it's just a bit of a clunky piece of legislation. But I think it's it can be quite useful, actually, because what it does do is in a scenario where you haven't got an existing dispute but you want to start talking to somebody about possibly whether they might want to leave the business, and that might be because they're not performing very well, or it might be in a redundancy situation, for example, it just provides a useful gateway, or starting point, to have those conversations and to say to somebody ‘can we have a protected conversation’? You then have to go on to explain to the employee what a protected conversation actually is and I think, again, that's a bit off-putting for employers because quite often they don't even know themselves what it is. But if you can get your head around that, and then you might want to make some commercial decisions about whether or not you actually think you need the 10 day period, then I think it can be quite useful. But what I always say to clients, and the key point to bear in mind, is that if the employee is alleging any sort of discrimination they could rely on the exception in the legislation and say, oh, it's an improper conversation and therefore it's not covered by section 111A. So I always advise employers in those discussions not to say anything that they wouldn't be embarrassed to say if it was an open court. So, in many ways the best way of thinking about it is not necessarily that it's not going to come out in open court, but it's just a mechanism to enable you to start a discussion with an employee about whether or not they might want a settlement agreement.”

That case is a decision of the Employment Appeal Tribunal called Meaker v Cyxtera Technology UK Limited. We have put a link to the judgment in the transcript of this programme.

LINKS
- Link to judgment: Meaker v Cyxtera Technology UK Ltd