Khan v HGS Global Ltd & Anor

For dismissal under section 95(1)(a) of the Employment Rights Act 1996, the tribunal must determine the factual reality of who terminated the employment contract. A freely agreed termination may be by mutual consent and is not thereby a dismissal.

Volunteering in a redundancy consultation does not itself prevent a dismissal. An employee is dismissed where, in substance, the employee volunteers to be dismissed as part of an existing redundancy exercise or has no real choice. Conversely, an employee who freely accepts severance as an additional option, when transfer and continued employment remain available, may agree to a consensual termination. The form of a dismissal letter does not determine the issue.

The Claimant, a team manager employed by HGS Global Ltd on a Dreams Ltd campaign, faced a transfer of the work to Dreams Ltd's High Wycombe premises. Employees whose journey would exceed one and a quarter hours could transfer, seek another HGS role, or elect a severance package described as potential redundancy.

The Claimant elected the package. The London (Central) Employment Tribunal held that he had made an informed and unpressured choice to end his employment by mutual consent. It dismissed his unfair-dismissal claim.

On appeal, the central issue was whether a formal redundancy dismissal, accepted by an employee, was nevertheless a dismissal under section 95(1)(a) of the Employment Rights Act 1996, or a consensual termination in substance.

1. Appeal dismissed. The Employment Tribunal did not err in law in concluding that the employment ended by freely given mutual consent, rather than by dismissal for the purposes of section 95(1)(a) of the Employment Rights Act 1996.

2. The governing inquiry is who, in reality, terminated the contract. The tribunal must look to the substance of the transaction, not merely its formal documentation. Mutual termination is possible where both employer and employee freely agree to end the contract; section 95(1)(a) concerns termination by the employer alone.

3. Free consent does not invariably establish mutual termination. In an established redundancy exercise, an employee who volunteers is ordinarily volunteering to be dismissed. The further inquiry is whether the employee volunteered for dismissal as part of that exercise, or instead agreed to a consensual termination separate from it.

4. The ET did not expressly formulate that distinction, but its findings resolved it. Transfer remained available. The Claimant was not told that he could not transfer, was not pressured to choose severance, and understood that severance was an additional option. If no employee chose it, there would have been no dismissals at that stage. A possible future reduction in team-leader posts did not convert his present choice into volunteering for dismissal.

5. The termination letter's language of redundancy dismissal was only the mechanism used to implement the agreement. It did not displace the ET's permissible finding as to the factual reality. Permission to appeal to the Court of Appeal was refused because the proposed appeal had no real prospect of success and raised no compelling reason for a further appeal.

• Employment Appeal Tribunal: Appeal dismissed in [2015] UKEAT 0176_15_1611.
• London (Central) Employment Tribunal: On 23 February 2015, the tribunal dismissed the Claimant's unfair-dismissal claim, finding consensual termination rather than dismissal.