Chivas Brothers Ltd v Millar (Contract of Employment : Notice and pay in lieu)

Whether employment has ended by dismissal or agreement depends on the reality and substance of the parties’ communications and conduct. An agreed termination is not undone because one party later asks whether an additional benefit, such as pay in lieu of notice, will be provided. Where the employment has already ended by agreement, the employer cannot subsequently be treated as having dismissed the employee. Acceptance of retirement benefits, related documentation and payments may provide compelling evidence of agreement.

The claimant had been absent through ill health for more than two years. Following discussions with his employer, an application for ill health retirement was made to the pension trustees and accepted with effect from 31 May 2009.

The claimant completed and returned the pension documentation, accepted pension payments from 1 June, and received his P45 and holiday pay. He later asked whether he was entitled to pay in lieu of notice. The Employment Tribunal held that the employer’s letter confirming retirement amounted to a dismissal and awarded twelve weeks’ notice pay. The employer appealed, arguing that the termination had been mutually agreed.

1. Appeal upheld and claim dismissed. The Employment Tribunal reached a conclusion that the facts could not support. The issue was whether the employer had terminated the employment or whether the parties had agreed its termination.
2. The tribunal had to determine what really happened by examining the realities and substance of the facts, applying the approach in Martin v Glynwed Distribution Ltd [1983] ICR 511 and Birch v Liverpool University [1985] ICR 470.
3. The correspondence showed that ill health retirement was the claimant’s objective and that the employer made an actual, rather than hypothetical, application to the pension trustees. The claimant completed the employee questionnaire and did not challenge the application.
4. When the trustees accepted the application, the claimant completed and returned paperwork recording the retirement date as 31 May 2009 and pension commencement as 1 June. He accepted his P45, holiday pay and pension payments without disputing the retirement or its date. Those acts demonstrated a mutually agreed termination.
5. The claimant’s later enquiry about notice pay did not invalidate the concluded agreement. A request for a further benefit may lead to a further agreement, but it cannot undo the agreement already made. The Tribunal’s contrary approach treated a subsequent request as a condition of an earlier agreement, which was legally incorrect.
6. The Tribunal’s reliance on Asamoah-Bokye Walter Rodney Housing Association Ltd [2001] EWCA Civ 8 and Walker v Heathrow Refuelling Service Co Ltd UKEAT 0366/04 was misplaced; neither case was in point. The submissions concerning personal bar therefore required no determination.

• Employment Appeal Tribunal: Appeal upheld. The Employment Tribunal’s judgment registered on 27 May 2010, awarding £3,864 for twelve weeks’ notice pay, was reversed and the claim dismissed.