A mutually agreed capability termination - on the grounds of an employee's ill health, is not liable as dismissal for the purpose of an unfair dismissal claim. So ruled the Employment Appeal Tribunal in the recent Riley v Direct Line Insurance Group (2023) case...
The Facts
Mr Riley had autism spectrum disorder, anxiety and depression, and had been absent from work for several years. During this period, he had been receiving 80% of his salary under an insurance policy. Following an assessment in Aug 2017, Mr Riley returned to work - but was signed off sick again in May 2018.
In August 2018, Direct Line obtained a medical report which concluded that it would be difficult for Mr Riley to return to sufficiently carry out his role. In reliance upon this report, they arranged a meeting with Mr Riley to discuss a potential termination of employment on the grounds of his continued absence. Having proactively checked with the insurers himself, Mr Riley was happy with the proposal after the HR Department confirmed that these payments would continue up to his state retirement age.
On this basis, he agreed to the termination, and a letter confirmed the arrangement. He then raised a claim for unfair dismissal on the basis that the termination letter contained the word 'dismissed' - as well as disability discrimination due to a failure to make reasonable adjustments.
The Decision
At first, the Employment Tribunal (ET) rejected his claim for unfair dismissal, as there was - in fact, no dismissal. The termination was consensual and mutually-agreed. There was no coercion or deceit, and Mr Riley actively investigated his options before agreeing to the termination in order to benefit from generous insurance payments. As such, he had made an informed decision, and it could not be classified as a dismissal. The claim for discrimination was time barred.
Following this, Mr Riley appealed to the Employment Appeal Tribunal (EAT). They ruled that the ET had reached the correct decision. They concluded that Mr Riley had not been tricked or coerced in any way, he was given adequate time to carry out his own investigations, and made the decision to accept. He fully understood what he was doing. The word “dismissed” in the letter did not change the reality and substance of the arrangement, so they rejected his appeal. They also said that the ET was right not to extend the time for his disability claim.
This article is intended for guidance and information purposes only. Readers are advised to call the HR Helpline on 01455 852 028 - who can offer you advice on correctly handling such decisions to avoid litigation and costs.
