In Kirklees Metropolitan Council v Robert John Radecki [2009] the Court of Appeal (CA) considered the question of whether a termination date agreed as part of a negotiated exit, was the ‘effective termination date’ (EDT), in circumstances where the compromise agreement was not finalised. The EDT is a statutory concept, in the context of this case, being the date from which time is calculated for lodging a claim at the Employment Tribunal (ET). Summary of the case
The employee, R, after being suspended, entered into discussions in June 2006 regarding the termination of his employment. The settlement proposals contemplated: a compromise agreement, payment of his notice, a reference and a termination date of 31 October 2006. Negotiations continued past this date, although he was not paid through the payroll beyond October.
In February 2007 R stated that he was not prepared to enter into the compromise agreement and requested that he receive payment of his salary from November 2006 onwards. On the 5 March 2007 Kirklees Metropolitan Council (the Council) wrote to R stating that the final date for his employment had been:
‘… agreed with your representative and yourself as 31 October 2006 on the understanding that the [compromise] agreement would be signed shortly.’
The Council continued:
‘You were terminated on the payroll system and your employment ended on [31 October 2006] and this was mutually agreed.’
R lodged a claim for unfair dismissal on 7 March 2007, and the issue as to whether he was out of time was dealt with as a preliminary point.
R’s evidence to the ET was that he had been unaware that he had not been paid salary from November 2006 to February 2007. The ET did not accept that R did not know he had not been paid.
The ET agreed with the Council’s contention that the EDT was 31 October 2006. The ET rejected R’s argument that since the negotiations and compromise agreement were without prejudice and subject to contract any agreement as to the date his employment was to be terminated was ineffective.
Instead the ET was satisfied that on the facts of this case, R had agreed to a consensual termination of his employment on 31 October 2006. He was therefore on the face of it, out of time for lodging a claim for unfair dismissal, and the ET did not consider that R satisfied the test of it not being reasonably practicable for him to have lodged his claim in time.
R appealed. The Employment Appeal Tribunal (EAT) overturned the ET’s decision and found that R’s employment had continued beyond 31 October 2006. The Council appealed to the CA.
Decision of the Court of Appeal
The CA overturned the EAT’s decision, and held that R’s employment had in fact terminated on 31 October 2006. However, the CA did not agree with the ET’s reasoning that there had been a consensual termination. The negotiations had been without prejudice and the 31 October date was ‘subject to contract’. The contract – the compromise agreement – was not entered into.
Instead the CA relied on the fact that the Council had stopped paying R’s salary as of 31 October 2006, and that R was aware of this. The non payment of salary was a repudiatory breach of contract, which became effective as they were satisfied that R had known that payment of salary had ceased from October 2006.
Comment
Kirklees highlights the problem of allowing negotiations to continue without being resolved. It is always advisable to set a date by which the compromise agreement must be entered into, otherwise disciplinary action will commence. It is of course always possible to continue the negotiations in parallel with disciplinary action. It certainly would not be advisable to cease paying salary – as this would be a fundamental breach entitling the employee to claim constructive dismissal – with a high chance of succeeding. The employer would then be in the unenviable position of having to argue that they should not be subject to the 25% uplift and that the employee would have been dismissed in any event.
By Andrea Nicholls, partner, Salans.
E-mail: anicholls@salans.com.
Kirklees Metropolitan Council v Radecki [2009] EWCA Civ 298
Sturdy v Leeds Teaching Hospitals NHS Trust
Legislation Update
Equality Bill
The Equality Bill was published on 27 April 2009. It aims to draw all strands of discrimination under one piece of legislation and, to some extent, to harmonise the various definitions of categories of discrimination. However, it goes further than this, and responds to some recent developments in case law, eg discrimination by association. If the Bill becomes law it also includes:
- A provision making ‘secrecy clauses’ unenforceable, ie that an employer cannot require employees to keep the terms on which they are employed secret. This is part of the drive to achieve parity pay between men and women, by making it easier for women to know what their male counterparts are earning.
- A ‘Gender Pay Information’ reporting requirement applying to all employers with 250 or more employees. The aim of this is to make employers recognise differences in pay. It is thought that, as this may highlight differences in pay between comparable men and women, any pay gap will be addressed.
- Positive discrimination to be permitted in certain circumstances, eg recruitment and promotion if candidates are otherwise equally qualified.
Working Time Directive
The EU talks on amending the Working Time Directive have broken down. This means that the proposed phasing out of the ‘opt-out’ over three years has been shelved. The opt-out remains in force, at least for the time being.
In Brief
Injury to feelings award
In an Employment Tribunal decision of Sturdy v Leeds Teaching Hospitals NHS Trust Mrs Sturdy was awarded (S) maximum damages of £29,500 for injury to feelings over age discrimination. This has been hailed as the highest award for injury to feelings for any act of discrimination in the UK.
