Our latest HR article looks at the recent case of Fentem v Outform EMEA Ltd , regarding bringing forward the date of resignation by operation of a contractual clause. We review the details of the case and provide practical guidance surrounding employee resignation and unfair dismissal.
Background to the Case
The Claimant resigned from his post giving contractual notice of 9 months. The Respondent invoked a contractual clause allowing them to ‘cut short’ the Claimant’s notice period by paying in lieu the balance of the notice period thus bringing employment relationship to an end, in this case, 1 month sooner than the original notice expiration date.
The Claimant brought legal proceedings against his employer arguing that the Respondent’s action in bringing the date of resignation forward was, in fact, a dismissal rather than a resignation.
The Employment Tribunal had to decide whether the Respondent’s actions of paying the remainder of the notice period in lieu and thus bringing the termination date forward was an unfair dismissal. The Tribunal found that the primary reason for the Claimant’s termination of employment was his resignation and he was not, therefore, dismissed.
Employee Resignation | EAT Decision
The Claimant appealed to the Employment Appeal Tribunal (EAT). The Employment Appeal Tribunal agreed with the Employment Tribunal’s decision that the Claimant was not dismissed and dismissed the Claimant’s appeal. The Employment Appeal Tribunal agreed that where an employee gives notice of resignation, the employer may choose to invoke a clause in the employment contract which specifically permits it to end the employment sooner by paying the balance of the notice period to the employee. The reason for this payment is the employee’s resignation which sets the wheels in motion for the employer to invoke the clause thus there is no dismissal. In law, where there is a contractual clause allowing for payment in lieu of notice, the employer’s decision to invoke the clause only alters the effective date on which the prior resignation takes effect.
Guidance for Employers
- Employers wishing to terminate an employee’s notice period sooner than the end of the said period must ensure they are allowed to do so by the terms within the employee’ contract of employment.
- It is also important that the employee has signed their contract of employment.
- Where there is no such clause permitting payment in lieu of notice, or a signed contract, the employer cutting short the notice period and paying in lieu will be unilaterally changing the terms of the contact opening itself up to a claim for unfair dismissal.
For legal advice you can trust surrounding employee resignation, get in touch with our team of HR and Employment Law Consultants today.