Effective date of termination and minimum notice

Lancaster & Duke Ltd v Wileman

Where there is a genuine entitlement to summarily dismiss, an employee cannot rely on the deeming provisions in the Employment Rights Act to get to two years’ qualifying service.

Section 86 of the Employment Rights Act 1996 (ERA) lays down the minimum periods of notice required to terminate a contract of employment. Most HR practitioners are familiar with these and indeed many contracts mirror these statutory provisions.

In certain circumstances an employee dismissed with no notice or less than the statutory minimum notice can ‘artificially’ extend the effective date of termination (EDT) to the date on which the proper statutory notice would have expired (ERA, s. 97(2)). This obviously can benefit employees who are dismissed within a week of their two-year anniversary at which point they gain statutory unfair dismissal rights. But what happens where the employee is summarily dismissed? Does s. 97(2) come to such an employee’s aid?

Background

Ms Wileman, a recruitment consultant, was summarily dismissed for gross misconduct two days before her two-year anniversary with her employer. There was no process carried out before her dismissal or any right to appeal. She lodged a grievance, but no hearing took place. She lodged an unfair dismissal claim. Her employer argued that she didn’t have the necessary two years’ service. She argued that adding the statutory minimum notice of one week would take her over the line. A tribunal agreed with Ms Wileman - and upheld her unfair dismissal complaint. It did not make a specific finding that Ms Wileman was not guilty of gross misconduct, as it was not required to do so as she had not brought a claim for wrongful dismissal, only unfair dismissal. In wrongful dismissal the test is quite different for a tribunal which is to consider all the facts and decide if there was actually a repudiatory breach, rather than whether the employer had a reasonable belief in concluding this. Her employer appealed.

EAT decision

The EAT allowed the appeal.

The case boiled down to a question of statutory interpretation, specifically the interaction between s. 86(1) and s. 97(2).

The provisions setting out the minimum notice periods in s. 86 are subject to s. 86(6) which preserves an employer’s right to treat a contract as terminable without notice because of the employee’s conduct. So, where an employer summarily dismisses an employee where, at common law, it is entitled to do so (e.g. gross misconduct), then the employee isn’t entitled to statutory notice – and the employee cannot extend the EDT by the period of statutory notice.

Although Ms Wileman argued that a finding she was guilty of gross misconduct would be incompatible with the findings of fact that the tribunal made in this case and that reading the decision in the round, it is apparent that there is only one possible answer: she had not acted in repudiatory breach of contract, the EAT disagreed.

The case was sent back to the tribunal for it to specifically make a finding as to whether Ms Wileman had been guilty of gross misconduct such that the employer would have been entitled to terminate the contract of employment without notice.

Link to judgment: http://www.bailii.org/uk/cases/UKEAT/2018/0256_17_0407.html

Comment

Employers cannot of course simply label the reason for dismissal as ‘gross misconduct’ to circumvent the application off the statutory extension – a tribunal will first look to see whether an employer was entitled to dismiss without notice before determining whether or not the EDT can be extended. A properly advised employee will always include a wrongful dismissal as well as a claim for unfair dismissal.