28-10-2011

Retracting dismissal notice given by mistake not so easy

An employer that intended to give a dismissal notice at the time, but later tried to unilaterally retract it when it discovered it had made a mistake, has been told by the court that it cannot do so.

An employee was under threat of redundancy so she began discussions about going self-employed with her manager. On 22 December, before agreement had been reached, the employer gave the employee notice that her employment would end on 31 December and an alternative agreement would take effect from 1 January.

On 5 January the employee told the employer that she did not accept the alternative agreement. She said she was entitled to treat herself as dismissed from 22 December – the date of the employer’s letter.

The employer said that, if the employee no longer wished to go self-employed she should return to work under the new agreement (ie it had made a mistake in dismissing her, so her employment was not terminated). If she did not it would treat her as having resigned. She did not return to work and the employer treated her as having resigned. She claimed unfair dismissal.

The Employment Tribunal (ET) ruled that she had resigned. It said that the statement that her employment was to be terminated from 31 December was an error and the employer had withdrawn it as soon as it realised. The case therefore came within a ‘special circumstances’ rule that says a dismissal can be unilaterally retracted by an employer, even if he originally intended to dismiss the employee, if the dismissal was in the heat of the moment.

On appeal, the Court of Appeal disagreed. It said the employer had intended to dismiss her, and had done so, clearly and unambiguously. It could not use the ‘special circumstances’ rule to retract the dismissal some time later, on grounds it had made a mistake. The 'special circumstances' says that an employer can only retract words that were clearly not intended, because they were said in anger, and are then retracted virtually immediately.

Recommendation

Employers should be absolutely sure that there is no reason why they might later want to retract a dismissal before giving a dismissal notice to an employee, as they can only retract it if there are special circumstances showing they never intended to give it in the first place.