Termination of contract
Labour & European Law Review Weekly Issue 338 26 September 2013
If an employee is offered - and accepts - the option of a redundancy, does that amount to dismissal or mutual termination of contract? In Francis v Pertemps, the Employment Appeal Tribunal (EAT) held that whether there is a dismissal will depend on whether the contract of employment has been terminated.
Mr Francis was employed by Pertemps, a recruitment business supplying contract labour to clients. He had an assignment as an administrative assistant under his contract to a specified client Transco (which subsequently became SGN). While Mr Francis was off sick SGN decided it did not need his services anymore.
When he returned to work, Pertemps explained that he had two options - either to accept two weeks’ notice while they looked for other work for him; or accept two weeks’ notice along with redundancy pay.
He initially chose the first option, but changed his mind when he realised it meant he would not receive unemployment benefit and opted for the redundancy offer. Pertemps then wrote to him confirming his redundancy and that he had the right to appeal (which he did unsuccessfully) “against the decision to terminate your employment”.
He claimed unfair dismissal.
The tribunal held that there was no dismissal. It considered that as Mr Francis’ contract identified a specific client, he could not assert a right to be moved elsewhere, and nor could Pertemps move him without breaking the provision that he worked for SGN, unless he consented to the variation.
The tribunal therefore concluded that the contract had come to an end by “mutual agreement” following a “consensual parting of the ways”.
The EAT overturned that decision, holding that the tribunal had considered the wrong question. It had applied the test for a redundancy payment which is dependent on whether the employment relationship has come to an end. In doing so the tribunal had focused on whether Mr Francis had the option of remaining in employment. The correct question was whether the contract of employment had been terminated.
Had it focused on the issue of who terminated the contract of employment, the EAT said that the tribunal could only have reached one conclusion - that it had been brought to an end by Pertemps without Mr Francis’ consent.
The EAT dismissed Pertemps’ argument that their use of the words “notice” and “redundancy” were loose terms, not intended to have their formal meaning. Where an employee is given two options, both of which involve dismissal (albeit distinguished by different terms), the EAT said that the only sensible conclusion was that the dismissal was intended by the person offering those options.
The case was remitted to a fresh tribunal to consider the reason for the dismissal.