The EAT has held, in the case of Willoughby v CF Capital plc, that an employer's unambiguous words of dismissal could not be retracted, even where the letter of dismissal had been issued as a result of a misunderstanding.

Mrs Willoughby was informed on 1 December 2009 that CFC was experiencing difficulties, and that one way to avoid redundancies was for staff to become engaged as self-employed contractors.  She expressed an interest in such a move, if the terms were acceptable to her, and requested further details of the terms from CFC. 

On 23 December, she received a letter from CFC referring to the meeting on 1 December and their "mutual agreement" that she become self-employed.  The letter confirmed the termination of her employment on 31 December and enclosed a copy of the self-employed agency agreement that would commence on 1 January.

After taking legal advice, Mrs Willoughby told CFC that she did not accept the agreement. CFC then closed for the Christmas break and it was not until 5 January that her manager contacted her to reassure her that there had been a misunderstanding and that, if she did not wish to move to self-employment, she could continue as an employee.  However, Mrs Willoughby maintained she had been dismissed and brought claims for unfair dismissal and breach of contract.

Her claims were upheld by the EAT which said that clear, unambiguous words of dismissal were to be taken at face value and she was entitled to assume that the decision to dismiss her was a conscious, rational decision.  While a "special circumstances" defence can sometimes operate to deprive clear words of dismissal of effect, this will only be in circumstances where the person did not intend to resign or dismiss, for example, when words are spoken in the heat of the moment and are quickly retracted.  Such a defence was not available when a conscious, rational decision to dismiss was taken but was later found to be a mistake.  While CFC had tried to retract the dismissal, the EAT felt that this was not done quickly enough – the intervention of the Christmas holiday period was no excuse.

Impact on employers

• This is a tricky case for employers and demonstrates the potentially serious consequences of a simple misunderstanding. 

• It highlights the importance of being completely clear at all times in dealings with employees and confirming, in writing, the outcomes of meetings and discussions.  The Tribunal said that the misunderstanding in this case could have been avoided had the employer sent the employee a note of the meeting on 1 December.

• Despite Mrs Willoughby's success, her refusal to restore the employment relationship may be taken into account by the Tribunal when assessing her compensation and her attempts to mitigate her loss.

19 August 2010

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