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Dismissals made in error cannot be retracted

BY Daniel Gorry
Employment Law & HR
BG Purple

In a recent Court of Appeal case, CF Capital plc v Willoughby, the Court held that a dismissal letter sent to an employee in error could not be withdrawn by the employer.

The general rule regarding withdrawal of notice is that, where notice is clear and unambiguous and it has been effectively communicated to the other party, it cannot be withdrawn. However, there is a “special circumstances” exception, usually for notice given by either an employee or employer “in the heat of the moment”.   

In this case the employer had entered into negotiations with employees to convert their employment status from “employee” to “self-employed” in order to avoid redundancies. The employer, mistakenly believing that the employee in question agreed to this change, issued her with an agency contract together with a letter that stated that she had been dismissed and was being offered re-engagement on the basis of the new contract.  

When the company realised that the employee did not accept the change, they attempted to withdraw the letter of dismissal and reinstate her employment. However, the employee then raised wrongful and unfair dismissal proceedings against her former employer.  

The employer tried to argue that they had issued the letter in error and should there benefit from the “special circumstances” exception. This argument was accepted by the Employment Tribunal. However, the employee appealed and was successful in the Employment Appeal Tribunal and in the subsequent Court of Appeal case.  

The CA held that the “special circumstances” exception was not really an exception at all; rather, it was an acknowledgment that a party giving notice in the heat of the moment may not truly mean what they are saying and so the other party cannot rely on it as effectively communicated notice.  

In this case, the employer had meant what they said when they issued notice. The employee was entitled to understand this as a ‘conscious, rational decision’. The fact that they were labouring under the delusion that the employee agreed to be dismissed was neither here nor there. As a result, the dismissal stood and the employee was entitled to claim unfair and wrongful dismissal.  

If you are thinking about changing the terms and conditions of your employees’ contracts, contact your Legal Manager for further advice. As this case confirms, once you’ve communicated a dismissal, it can rarely be retracted.

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