Varying the effective date of termination

20 Jun 2012

Experienced HR professionals will be familiar with the fact that it is not possible for employers to agree with their employee to vary the date of termination.  The phrase used by lawyers to describe ascertaining the date of termination is that it is a “statutory construct”: in other words, the date is absolute and cannot be changed unilaterally or by agreement.

Given the well-established nature of this principle, imagine our surprise when the EAT recently heard the case of Hawes & Curtis Ltd v Arfan & Mirza and concluded that the employer had, in fact, changed the effective date of termination.

Before considering the facts of the case, it is worth noting briefly why the question of the effective date of termination is so important.  Obviously, there are financial repercussions when the termination date is moved:  the employee’s entitlement to salary and accrued holiday will change.

That said, the real significance in the termination date lies in the limitation periods for bringing a tribunal claim.  Of course, the time limit runs from the date of dismissal and a claim must be brought within 3 months.  Employers and HR managers usually have a feel for those cases which may become litigious and many will note the deadline day so that, when it passes with no news from the tribunal, they can relax.

Equally, being able to show that a claim has been brought out of time is a simple and relatively inexpensive means of bringing tribunal proceedings to a swift conclusion.

As a result, accurately identifying the effective date of termination is very important.

In Hawes & Curtis Ltd v Arfan & Mirza the employees were summarily dismissed for gross misconduct on 5 October 2011.  The employees were informed of their right of appeal and duly appealed against their dismissals.  Their appeals were heard on 27 October 2011 and the outcome was communicated to them on 4 November 2011.  Whilst their appeals were not upheld, the appeal outcome letters went on to state:

“Based on the evidence available to her, and as set out in detail in the letter of 5 October 2010 sent to you, Ms Alexander has decided to uphold the decision of summarily terminating your employment but has asked that the effective date of termination of your contract be that of the date of this letter, that is 4 November 2010.”
The employees were paid through PAYE up until 4 November 2011

The employees subsequently brought employment tribunal claims and, as a preliminary issue, it had to be determined when the date of termination was.  If it was 5 October, their claims were out of time; if it was 4 November, the claims were in time and could proceed.

Most employment lawyers who heard the facts of this case would conclude that it is not possible to vary the date of termination and therefore the correct date was 5 October.  Most other people would conclude that the appeal letter makes it perfectly clear that the termination date was 4 November.

The lawyers would, of course, be wrong.

The EAT concluded that, although it is rare for an effective date of termination to be varied, it is possible and that it had been varied in this case.

His Honour Judge David Richardson summed up the reasoning very neatly:
“…just as the contract of employment revives indefinitely if an appeal reinstates the employee, so it revives for a limited period if an appeal varies a summary dismissal to a dismissal on notice or a dismissal on some other date.”

In other words, the employer had shot itself in the foot and the claims, which were in time, could proceed.

Our view:

Employers should always be mindful, when hearing appeals, of not putting anything in writing they might subsequently regret.  As a starting point, always work on the basis that the termination date is not affected by an appeal unless that appeal is upheld.  Confusing matters at the appeal stage can be, as shown in this case, a real own goal.