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Will a resignation become a dismissal if Payment in Lieu of Notice is used?

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Previous appeal decisions will generally be binding on Employment Tribunals and subsequent appellate courts which are at the same level.

Issue

In the case of Mr M Fentem v Outform EMEA Ltd the Employment Appeal Tribunal considered whether it would be appropriate to still follow its previous decision that had established there was no dismissal if an end date was brought forward by the employer exercising a contractual right to pay in lieu of notice following an employee’s resignation.

Facts

On 16 April 2019 Mr Fentem resigned giving the employer nine months’ notice. His letter of resignation noted that his last day of work would be 16 January 2020 and as this was close to the end of the financial year, he was willing to be flexible.  On 19 December 2019 Mr Fentem was called to a meeting with his line manager and told that the employer was exercising its discretion to pay him in lieu of the remainder of his notice period, bringing his employment to an immediate end. He claimed unfair dismissal.

Decision

It was held that Mr Fentem had not been dismissed. Whilst ordinarily where an employee resigns on notice and the employer unilaterally brings forward the date of termination it will amount to a dismissal the EAT decision in Marshall (Cambridge) Ltd v Hamblin 1994 had established an exception where the employer relied on a contractual term permitting it to waive or shorten the period of notice. In the circumstances termination of the employment was still by reason of resignation.

Key points

Concerns were expressed that this principle was wrong but the decision in Hamblin could not be described as ‘manifestly’ wrong, so it was still appropriate to follow it. However, whether it will survive should the case proceed to the Court of Appeal is now doubtful. Employers should proceed with caution should they wish to bring the employment contract to an end earlier than the expiry of the employee’s notice period.

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