The importance of getting the words right

25th September 2023 An unusual case has been heard by the Employment Appeal Tribunal this month regarding the question of whether there had been a dismissal or not. In some respects that issue itself is not unusual. Many claims go before the Employment Tribunals where the claimant alleges that they have been constructively dismissed while the employer defends the case on the basis that they have done nothing to constitute or amount to a dismissal. However, the case of Riley v Direct Line Insurance Group is rather different and highlights the importance for employers to get the words right in their correspondence and dealings with their staff, particularly at the point that the person’s employment comes to an end.

The case concerned an individual that had been off work for a considerable period due to his health. The individual in question had autism spectrum disorder, and depression and anxiety. He was employed by Direct Line Insurance from March 2012. He was a member of the PHI (Permanent Health Insurance) scheme offered to staff at Direct Line Insurance and had taken an upgraded version of the scheme which offered financial support up to retirement age in the event of incapacity. He had a period of sickness absence between 2014 and October 2017, resulting from anxiety. He was paid 80% of normal salary in that period under the terms of the PHI scheme. In 2017 a 4-stage plan of amendments were proposed with a view to assisting a permanent return to work. He attempted to return, but after 5 months of adjustments the return proved unsuccessful, and the individual commenced a further period of sickness absence.

In 2018 there was correspondence between the individual and Direct Line Insurance, which included looking into the duration of payments under the PHI scheme. A meeting took place in August 2018 which was followed by further correspondence in September 2018, in which the employer confirmed that:-

“If you wish to take on Pay Direct [ie the payments under the PHI scheme] and confirm this we will invite you to a formal meeting and end your employment with Direct Line Group.
“If you confirm your agreement……..if you are happy to move to Pay Direct, please can you confirm this to me….”

The employee replied as follows:-

“…..please accept this email acceptance for Pay Direct.”

The employee was informed on the 13th September 2018 that he would receive payments under the PHI scheme to state pension age. He was then invited to a meeting to discuss his “proposed move to pay direct scheme…...” The individual agreed to that.

On the 25th September 2018 the individual was notified that he was dismissed with effect from the 19th September 2018 on grounds of capability due to ill-health. The wording of the letter indicated on the face of it that this was a formal dismissal by Direct Line.

Claims were subsequently brought against Direct Line in the Employment Tribunal, including the allegation that the individual had in fact been unfairly dismissed. The decision of the Employment Tribunal in dismissing the claim of unfair dismissal was challenged, and the case went to the Employment Appeal Tribunal (EAT).

The Employment Appeal Tribunal reviewed the case law relating to consensual termination of employment. It concluded that in determining how the employment ended they were required to look at the realities rather than the form of the transactions and should consider who really terminated the employment. The Employment Appeal Tribunal noted that the case law has long stated that termination by freely given mutual consent of both the employer and employee will not amount to a dismissal by the employer. It was observed that the original Employment Tribunal had rejected an argument that the individual had been “tricked” in any way and concluded that the individual had actively enquired into the terms of the PHI scheme and continuing payments to retirement age and had left to take up that option.         

In reaching their conclusion that the Employment Tribunal was correct in stating that there had not been a dismissal by Direct Line, the Employment Appeal Tribunal noted that:-

“……the consent was freely given, as we say above the tribunal considered the evidence relating to this in detail.  They went to considerable lengths to emphasise their conclusions that Mr Riley was not tricked or coerced in any way and that he participated in the discussions, was given time and fully understood what he was doing.” It went on to conclude that:-

“We are satisfied that it was open to the tribunal on the evidence to find that the termination of Mr Riley’s employment came about by the free mutual consent of both parties……”

The main problem that brought this case about was the choice of wording used by Direct Line in their letter to the claimant, stating that he was being dismissed on grounds of capability. No doubt Direct Line considered that they were meeting a need to specify one of the potentially fair reasons for dismissal listed in the Employment Rights Act 1996 in writing to the individual as they did. However, the fact is that any such a view was misplaced, and it actually caused them and invited the problem of the Tribunal litigation, with the costs and inconvenience that came with that wording.

The case therefore highlights the need to use clear and accurate language and to take care in how employment is ended where there is in fact an agreement between the employer and employee on the termination of the employment. Normally a settlement agreement would be used to avoid such problems. Although the facts of this case are unusual, it does highlight the need to be careful with the wording and correspondence used in any termination, and the need when there is in fact mutual consent to termination of employment for that fact to be clearly and accurately recorded.      

At Hallett Employment Law Services we can help you reduce risks of litigation and assist you in dealing with employment disputes and negotiations.           

If you need any further advice on any matter raised in this article do not hesitate to contact us at Hallett Employment Law Services Ltd.