Willoughby v CF Capital plc EAT/0503/09
unfair dismissal | dismissal or resignation | special circumstances
The Employment Appeal Tribunal (EAT) has held that an employer can retract unambiguous words of dismissal only in exceptional circumstances.
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Implications for employers
- It is very difficult for employers to withdraw a notice of dismissal once it has been given, even if there has been a genuine mistake or misunderstanding. Take extra care when suggesting a fundamental change to the working relationship to an employee that could be misconstrued as dismissal.
- It is equally difficult for an employee to retract an unambiguous resignation, which can happen in the heat of the moment when he or she is angry.
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Ms Willoughby had worked at CF Capital plc for 18 years, most recently as a sales manager, when the company began to struggle financially. On 2 December 2008, she had a meeting with her line manager Mr Keeley to discuss the possibility of avoiding redundancies by moving as many of the sales team from being direct employees to working on a self-employed basis. Under the proposed arrangement, the sales staff would be paid a monthly retainer together with commission at 50% of gross profit.
Mr Keeley and Ms Willoughby later gave differing accounts of what happened at the meeting. Ms Willoughby admitted that she had expressed an interest in becoming self-employed, but did not believe that she had made any commitment to the new arrangement. However, Mr Keeley thought that Ms Willoughby had agreed to the switch.
Ms Willoughby tried to get the paperwork from Mr Keeley that she said she needed to see before making a final decision. Three weeks after the initial meeting, Mr Keeley sent a letter to Ms Willoughby enclosing the agreement for self-employment. The contents of the letter assumed that Ms Willoughby had already agreed to the switch and it informed her that "termination of your existing employment contract will be effective from 31 December 2008".
Ms Willoughby, who received the letter on the last day before the Christmas break, took legal advice and was told by her solicitor not to do any further work for the company. The business was closed until 5 January and, after the Christmas break, Mr Keeley telephoned her and expressed his surprise at what he saw as a change of heart. He sought to reassure Ms Willoughby that there had been a misunderstanding and that, if she did not wish to become self-employed, her employment would continue as before. Despite further correspondence, Ms Willoughby did not return to work.
Ms Willoughby subsequently brought claims for unfair and wrongful dismissal. The employer disputed this on the basis that it believed that she had resigned.
The employment tribunal said that, in isolation, the letter did amount to the termination of Ms Willoughby's dismissal. However, the employment tribunal examined the authorities on withdrawing notice of termination of employment (including Sothern v Franks Charlesly & Co [1981] IRLR 278 CA and Martin v Yeomen Aggregates Ltd [1983] IRLR 49 EAT) and found that there were "special circumstances" in this case that allowed the employer to withdraw the dismissal. The words of dismissal had been withdrawn as soon as practicable after the employee had alerted the employer to the mistake that it had made.
The EAT disagreed. It recognised that, as a general rule, an employer that uses unambiguous words of dismissal to an employee will be dismissing him or her and terminating the contract of employment. The same principle applies where an employee uses unambiguous words of resignation to the employer: he or she will be resigning and terminating the contract of employment. The EAT went on to say that "this rule is of wide application; and exceptions are of a limited nature".
According to the EAT, the fundamental question is whether or not the person to whom the words were addressed was entitled to assume that the decision expressed was a conscious, rational decision. This is why the only "special circumstances" that have been recognised in case law are words expressed in the heat of the moment that are soon retracted. The EAT also pointed out that the limitations to the "special circumstances" rule are also shown in Buckland v Bournemouth University Higher Education Corporation [2010] IRLR 445 CA, where the Court of Appeal decided that an employer that commits a repudiatory breach of contract has no right to an opportunity to cure the breach.
Applying these observations to this situation, the EAT held that the words in the letter were an unambiguous termination of Ms Willoughby's employment. Given the extremely limited nature of "special circumstances", it is not enough to assert that Ms Willoughby ought to have concluded that something was seriously wrong when she received the letter and that the employer had made a mistake. Ms Willoughby and her advisers were entitled to take the view that her employment had been terminated. In any event, the dismissal was not retracted in time. A retraction would have to be made in "a day or two" and the intervention of a holiday period could not be an excuse for the employer.
The EAT therefore concluded that Ms Willoughby had been dismissed and her claims could proceed.
Additional resources
- How to deal with a heat of the moment resignation The XpertHR "how to" section provides guidance on dealing with heat of the moment resignations.
- Resignations: employee notice We began a series of articles on resignations with an overview of employees' notice obligations and employers' rights in relation to employee notice.
- Other cases involving withdrawal of notice of termination include:
Case transcript of Willoughby v CF Capital plc (Microsoft Word format, 79K) (on the EAT website)
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