The Employment Appeal Tribunal (EAT) held that a letter labelled to be 'without prejudice' actually had the effect of dismissing the employee with immediate effect.

Meaker v Cyxtera Technology UK Ltd [2023] EAT 17

Facts of the case

The claimant (M) was employed by Cyxtera Technology UK Ltd (CTUK) in a manual role that involved heavy lifting and lone working on night shifts. M suffered back injuries that led to an extended period of time off work and, following occupational health assessments, it was agreed that M's limitations on his ability to carry out weight-bearing work were likely to be permanent, thereby impacting on his ability to carry out his job.

In January 2020, an HR manager held a conversation with M indicating that CTUK was considering terminating his employment and raising the possibility of a settlement agreement. A further telephone conversation was held in which the HR manager said he made it clear to M that all possibilities in terms of identifying alternative roles had been exhausted, although M believed further enquiries would be made.

On 5 February 2020, CTUK sent M a letter which he received on 7 February 2020. This letter was labelled 'without prejudice' and stated that M and CTUK had agreed that M's employment would terminate by mutual agreement, by reason of capability on 7 February 2020. The letter offered an ex gratia payment in addition to M's normal contractual entitlements, conditional on M signing a settlement agreement. M rejected the settlement offer, and the HR manager emailed M to acknowledge his rejection of the offer and to explain why CTUK could not allow him to return to work. On 14 February, M received a payment, which he was told reflected his payment in lieu of notice and outstanding holiday pay.

M brought a claim of unfair dismissal in the Employment Tribunal (ET). The key question was whether the claim had been brought in time: CTUK contended the termination date was 7 February 2020; M contended the termination date was 14 February 2020 (in which case the claim would have been brought in time). The ET held that the 'without prejudice' letter was a dismissal letter and therefore the termination date was 7 February 2020, meaning the claimant's claims were out of time. M appealed to the EAT.

EAT decision

The EAT dismissed M's appeal and upheld the findings of the ET.

The EAT held that:

  • The effective date of termination was the date of receipt of that letter by M (7 February 2020). This was the case even if the letter amounted to a repudiatory breach of contract, giving rise to a constructive unfair dismissal claim.
  • The ET had not erred in construing the 5 February 2020 'without prejudice' letter as a dismissal letter. The letter was sufficiently clear that it was terminating M's employment unilaterally, despite the incorrect reference to employment ending by mutual agreement. It did not come wholly out of the blue and although it was headed 'without prejudice', the tribunal was entitled to read it as having two distinct parts: one dealing with termination and M's contractual payment entitlements; the other offering the ex gratia payment subject to a settlement agreement. The letter was clear that the termination date was 7 February 2020 and that this was not dependent or contingent on anything else happening.
  • M had not shown that it was not reasonably practicable to present his unfair dismissal complaint in time, so the ET had correctly decided not to extend time to allow M's claim.

The Birketts view

Many employers rely on a letter to an employee labelled 'without prejudice' as being genuinely 'off the record', in that it cannot be referred to or disclosed in subsequent tribunal proceedings. The fact that the EAT in this case held that the letter could be read in two parts is an interesting development and shows the importance of taking care to ensure such letters are properly drafted to ensure they retain legal privilege.

Clearly in this case, it was in the employer's interests that the letter amounted to a dismissal letter. Crucially, the EAT held that the without prejudice letter had not come wholly out of the blue; it had already been agreed that M could not return to his original role and termination had been contemplated and discussed. This is a timely reminder that when letters are labelled as being 'without prejudice' there must be a genuine dispute in existence at the time the letter is sent. If there is no pre-existing dispute, employers should consider expressly labelling the conversation and letter as being a 'pre-termination negotiation' or 'protected conversation' subject to s.111A Employment Rights Act 1996.

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