In Meaker v Cyxtera Technology UK Ltd [2023] EAT 17, the EAT held that a tribunal had been entitled to find that a letter had been sufficiently clear and unambiguous to dismiss an employee, that the employee’s unfair dismissal claim had been presented out of time and that time should not be extended to permit it to proceed.

This case however is most interesting because of its analysis of the letter sent to the employee.

FACTS

Mr Meaker was employed by Cyxtera Technology UK Ltd (Cyxtera) in a heavy manual role. He suffered back injuries in 2016 and 2018 and was off work for an extended period. During 2019, it was agreed that limitations on Mr Meaker’s ability to do heavy work were likely to be permanent and an application for income protection payments was unsuccessful.

On 7 January 2020, Cyxtera’s HR manager advised Mr Meaker that the company was considering terminating his employment and raised the possibility of a settlement agreement.

On 20 January 2020, following a conversation with the HR manager, Mr Meaker believed that further enquiries were to be made about alternative employment.

On 5 February 2020, Cyxtera sent Mr Meaker a letter, headed “without prejudice”, which stated that:

• His employment would terminate by mutual agreement by reason of capability.
• His last day of employment would be 7 February 2020.
• He would receive payment in lieu of ten weeks’ notice and payment for untaken holiday. His P45 would be issued following final payment from the company.

The letter enclosed a settlement agreement and set out Cyxtera’s offer of an ex-gratia payment, subject to Mr Meaker entering into the agreement.

On 7 February 2020, Mr Meaker wrote to Cyxtera rejecting the settlement offer.

On 14 February 2020, payment of both the PILON and pay for untaken holiday was received in Mr Meaker’s bank account.

On 24 February 2020, Cyxtera replied to Mr Meaker’s email of 7 February 2020 explaining why it could not allow him to return to work and acknowledging his rejection of the settlement offer.

Mr Meaker brought an unfair dismissal claim. Cyxtera argued that Mr Meaker’s EDT was 7 February 2020 while Mr Meaker argued that it was 14 February 2020. It was accepted that if Cyxtera was correct, (subject to the tribunal extending time) Mr Meaker’s claim had been presented out of time and if Mr Meaker was correct, his claim has been presented in time.

At a preliminary hearing, the tribunal dismissed the claim. It held that Mr Meaker’s EDT had been 7 February 2020 and that he had failed to show that it had not been reasonably practicable to present the claim in time.

Mr Meaker appealed, arguing that:

• Even if it was correctly construed as a letter of termination, receipt of the letter of 5 February 2020 did not, in law, give rise to an EDT of 7 February 2020.
• Alternatively, the tribunal erred in construing the letter of 5 February 2020 as a letter of termination.
• Alternatively, the tribunal erred by not extending time.

Decision

The Employment Appeal Tribunal looked at a number of issues, but key to the Court was when was the employee’s Effective Date of Termination. All employees have 3 months less a day to issue a claim. It was agreed between the parties that if the employer was correct, Mr Meaker’s claim was out of time; if Mr Meaker was correct, his claim was in time.

In this case, the tribunal had been entitled to read the letter of 5 February 2020 as comprising two distinct parts. One which dealt with the termination of Mr Meaker’s employment and the other making a proposal for Mr Meaker to waive his statutory claims by entering into a settlement agreement.

The EAT also considered whether the letter’s beginning, referring to agreement having been reached that Mr Meaker’s employment would terminate by mutual agreement (when that was not the case), meant that the letter, as a whole, became ambiguous and not clear enough to amount to a letter of dismissal. It decided that it was not ambiguous.

Comment

The case will be interesting for any employers looking to exit out an employee – particularly if “out of the blue”. Employers have to be very careful when terminating employment, as of course it it is not guaranteed that the employee will accept the offer of a settlement agreement.

Once you embark on the road to a settlement agreement, an employer is effectively terminating employment. If you say to the employee that it is ‘take it or leave it’ as it were, then if they leave it they can still bring a claim. Here, the employee (not having advice) would likely have won his claim if he had issued the claim more promptly.

What is clear that if you wish to offer an employee a settlement, you should only do so if there is in fact a ‘mutual agreement’ in principle. If there’s not an agreement, one needs to tread carefully.