Too late to retract notice of dismissal ?

11 September 2012

In 2008 C.F. Capital Plc ('the Company') was considering requesting that staff become self-employed in order to avoid having to make redundancies. In contemplation of this the Company held meetings with certain employees to discuss whether any of them would be prepared to make such a move. Mrs Willoughby ('the Claimant') expressed an interest in the proposals and requested written details so that she could consider the matter further. The Company misunderstood her interest and mistakenly believed that if they sent her the terms of self-employment she would accept. As a result of this misunderstanding instead of sending the Claimant the written terms as requested, the Company sent an agency agreement which stated that the Claimant's current employment would terminate on 31 December 2008, at which point she would become self-employed. The Claimant decided that she did not want to accept the agency agreement and on 5 January 2009 communicated this to the Company via a telephone conversation. During this conversation the Company told the Claimant that if there had been a misunderstanding and she did not wish to become self-employed then her employment would continue as before, however the Claimant maintained that the statement contained in the agency agreement served as an effective dismissal and claimed for wrongful and unfair dismissal. Case law has established general rules with regards to notice which ends employment: once clear and unambiguous notice has been served it cannot be unilaterally withdrawn. In addition to this general rule, an exception has also been established applicable to certain situations. This is the 'special circumstances' exception, which entitles the recipient of the notice not to take it at face value. Typical situations where 'special circumstances' apply involve cases where notice is given in the heat of the moment, for example a sudden notice of resignation or dismissal during a dispute. In such situations it is usually wise for the recipient of such notice to allow a cooling off period and take time before accepting the notice to check whether it was actually intended. In the Court of Appeal the Company accepted that when it sent the letter to the Claimant it intended to dismiss her, but argued that she could not take the notice at face value as it was apparent that the dismissal was premature and a mistake. The Court stressed that the rule is that a notice of resignation or dismissal has effect according to the ordinary interpretation of its terms. The 'special circumstances' exception did not apply to this case, as the Company had intended to dismiss her and it had been set out in clear and unambiguous terms, to which there could be no other possible interpretation. The giving of the notice may have been by mistake, but it could not be unilaterally withdrawn. The case serves as a valuable reminder to employers of the great care that must be taken when terminating an individual's employment. In particular it highlights the importance of ensuring confirmation of the intention of each party to the notice by demonstrating the serious consequences that can come from acting on a misunderstanding. It is also evident that the 'special circumstances' exception is to be given a very narrow interpretation, and in giving judgment the Court stated that the doctrine should not be seen as a true exception to the rule, but rather it should be seen as a precautionary reminder to the recipient of the notice to satisfy for themselves that the giver truly intended to give notice. For additional information please contact Alexandra Dean of Gepp & Sons on 01245 228141. The above is not legal advice; it is intended to provide information of general interest about current legal issues. 1 [2011] EWCA Civ 1115