Don't bank on it

Radecki v Kirklees Metropolitan Borough Council

Anyone wanting to lodge a claim for unfair dismissal has to do so within three months of the effective date of termination (the date on which the termination takes effect if the employee is dismissed without notice). In Radecki v Kirklees Metropolitan Borough Council, the Court of Appeal said that this was when the Council stopped paying Mr Radecki’s salary into his bank account.

Basic facts

Mr Radecki started work as a teacher for the local authority in September 2005 but was suspended in October on full pay. His union and the authority’s human resources department then negotiated a draft compromise agreement (headed “without prejudice” and “subject to contract”) which stated that his employment would end on 31 October 2006.

Although Mr Radecki had not signed the agreement by that date, he was informed on 1 November that he had been taken off the payroll. On 22 February 2007 he wrote to the authority saying that he rejected the draft compromise. Kirklees wrote back on 5 March saying that it had been mutually agreed that his employment should come to an end on 31 October 2006 and that it was not prepared to reopen negotiations with him.

He then submitted an unfair dismissal claim on 7 March arguing that his employment had not come to an end until 5 March.

Tribunal and EAT decisions

Although the tribunal accepted Mr Radecki’s argument that the compromise agreement could not take effect until he had signed it, it held that Mr Radecki had agreed that his employment should come to an end on 31 October in a “freestanding agreement” separate to the compromise agreement. His claim was, therefore, out of time.

The EAT, however, allowed his appeal, saying that Kirklees could not rely on an agreement that was “subject to contract” and “without prejudice” to show there had been a freestanding agreement which would (just like the compromise agreement) require the consent of both parties.

As for the compromise agreement, it said that both parties were free to withdraw from it before it was signed as Mr Radecki had done. The Council had not therefore made a “sufficiently unequivocal statement” that could be regarded as having terminated the employment relationship until the letter of 5 March.

Court of Appeal decision

But the Court of Appeal disagreed and allowed the Council’s appeal. It said that although the tribunal had been wrong to interpret the draft agreement as a consensual agreement (including the clause that Mr Radecki’s employment would terminate at the end of October 2006), it decided as a matter of fact that he was aware he would not be paid after 31 October.

It concluded that Kirklees had therefore “brought Mr Radecki's employment to an end, for the purpose of the statutory concept of the effective date of termination, by ceasing to pay his salary from 31 October 2006 (the last vestige of any performance of the contract), which they had indicated that they would do and which Mr Radecki knew that they had done when the payments ceased to come into his bank account. That is inconsistent with a continued willingness to enter into a settlement agreement”.