Kirklees Metropolitan Council v Radecki

For the statutory concept of the effective date of termination, summary dismissal takes effect when the employer brings the employment relationship to an end and the employee knows of that termination. A repudiatory breach need not be accepted under ordinary contractual principles before the statutory termination becomes effective.

Where payment of salary is the last remaining performance of a suspended employee’s contract, the employer may terminate the employment by communicating that payment will cease and then ceasing payment. A proposed compromise agreement marked “subject to contract” creates no binding agreement until formally executed. Its proposed termination date cannot establish termination by mutual consent.

A local authority stopped paying a suspended teacher after negotiations for a compromise agreement had produced a draft providing for termination by mutual consent on 31 October 2006. The draft remained “subject to contract” and was never executed. The teacher later rejected it and presented an unfair dismissal complaint on 7 March 2007.

The Employment Tribunal found that the employment had ended on 31 October and dismissed the complaint as outside the three-month limit under Employment Rights Act 1996, section 111(2)(a). The Employment Appeal Tribunal held that employment continued until March 2007 and that the complaint was in time. The central issue on the employer’s appeal was whether the cessation of salary had itself brought the employment to an end for the statutory purpose, notwithstanding the absence of a binding compromise agreement.

1. Appeal allowed. The court unanimously set aside the Employment Appeal Tribunal’s decision. By a majority, Rix and Toulson LJJ held that remission was unnecessary and that the unfair dismissal complaint was out of time. Rimer LJ would have remitted the limitation question to the Employment Tribunal.
2. The draft compromise agreement was expressly “subject to contract”. It never became a formal agreement executed by both parties. Its provisions, including the proposed termination date, therefore had no contractual effect. The employee’s acceptance slip also created no binding agreement because statutory advice under section 203 of the Employment Rights Act 1996 and formal execution remained outstanding. The Employment Tribunal had consequently erred in finding termination by mutual consent.
3. The statutory effective date of termination is not governed by the contractual rule that a repudiatory breach leaves a contract subsisting until accepted. Dedman v British Building & Engineering Appliances Ltd [1974] ICR 53 and Robert Cort & Son Ltd v Charman [1981] ICR 816 establish that a summary dismissal takes effect for the statutory limitation regime when the employer terminates the employment, even if its conduct is a repudiatory breach giving rise to damages.
4. Rix LJ, with whom Toulson LJ agreed on the final disposal, held that the Employment Tribunal had already made the necessary findings. Salary was the last vestige of performance because the employee had long been suspended and performed no work. The employer communicated that he would be removed from payroll, ceased paying him after October, and the employee knew within the following fortnight that payment had stopped. Those circumstances brought the employment to an end for the statutory purpose by 31 October 2006.
5. Rimer LJ agreed that an effective termination could occur by unequivocal conduct and that later events could not retrospectively cure an earlier lack of clarity. He considered, however, that the Employment Tribunal’s reasoning had been wholly coloured by its erroneous finding of mutual consent and had made no finding on unilateral termination. He would therefore have remitted that factual question.

1. Court of Appeal (Civil Division): The appeal was allowed unanimously and the Employment Appeal Tribunal’s decision was set aside. By a majority, the court held that remission was unnecessary and that the claim was out of time: [2009] EWCA Civ 298.
2. Employment Appeal Tribunal: His Honour Judge Serota QC allowed the employee’s appeal. He held that the employment continued until 5 March 2007 and that the complaint presented on 7 March was in time.
3. Leeds Employment Tribunal: The tribunal held that the effective date of termination was 31 October 2006. It found that presentation within three months had been reasonably practicable and dismissed the complaint as out of time.