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Termination of employment by agreement not a dismissal

By September 26, 2023Employment

The recent case of Riley v Direct Line Insurance Group serves as a helpful legal decision in support of the contention that an employee’s employment can be brought to an end with the agreement of the employee concerned, and that this may not constitute a dismissal.

This case involved an employee, Mr Riley, who had Autism and suffered with anxiety and depression. Mr Riley had been on long term sick leave for a number of years as a result of the latter. His employer at the time, Direct Line Insurance, met with him with a view to facilitating his return to work, and obtained medical evidence which stated that Mr Riley would never be able to return to work.

Whilst consulting with Mr Riley regarding the issue as to his return to work and the medical evidence available, Mr Riley was advised as to the fact that he was enrolled on Direct Line’s private health insurance scheme, which offered salary payments until retirement age in the event of incapacity. Mr Riley accepted this proposal in principle, and after obtaining confirmation that he would indeed receive salary payments until retirement age under the scheme, Mr Riley accepted this proposal.

A final meeting took place to end his employment and this was followed up by letter from Direct Line to Mr Riley stating that he was dismissed on the grounds of capability due to ill health.

Mr Riley subsequently brought claims for unfair dismissal and failure to make reasonable adjustments. However, the Tribunal concluded that there had been no dismissal. Notwithstanding the fact that the letter from Direct Line which confirmed his employment had terminated stated that Mr Riley had been dismissed, the Tribunal concluded that Mr Riley’s employment had been brought to an end by mutual agreement. Mr Riley appealed this decision, and the Employment Appeal Tribunal agreed with the Tribunal’s finding in this regard.

Whilst the issue of dismissal will always be assessed on the specific facts of each case, this case demonstrates that when an employee agrees to their employment being brought to an end, this will unlikely constitute a dismissal. That said, employers need to tread very carefully when relying on an employee’s agreement to the termination of their employment in the absence of a settlement agreement, as in this case, the fact that the employee availed himself of the permanent health insurance benefits of his employment was clearly a distinctive factor in both Tribunals concluding that he had indeed agreed to the termination of his employment. In particular, both Tribunals noted that Mr Riley was not tricked or coerced in any way, he freely participated in discussions with Direct Line and fully understood that he was agreeing consensually to his employment ending.

Whilst this is a helpful decision, it is therefore advisable for any employer wishing to bring an employee’s employment to an end by agreement to take carefully considered legal advice before doing so.

If you have any questions or require further guidance, please do not hesitate to contact our Employment Team at [email protected].   

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Jennifer Johnson

Author Jennifer Johnson

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