Unfair Dismissal or Mutual Termination: Riley v Direct Line Insurance Group

In the recent case of Riley v Direct Line Insurance Group plc, the Employment Appeal Tribunal dismissed Mr Riley’s appeal against the decision of the employment tribunal to reject his unfair dismissal claim against his employer, on the basis that there was in fact no dismissal but rather a consensual termination to his employment resulting in no dismissal under section 95 Employment Rights Act 1996.

Background

The Appellant was disabled by reason of autism spectrum disorder, anxiety and depression and was employed by Direct Line Insurance Group as a Homes Claims Advisor from March 2012. From 2014 until October 2017 Mr Riley was absent from work with anxiety and depression. For much of this period, he was paid 80% of his normal salary under a private health insurance scheme.

Following an assessment in August 2017, Mr Riley returned to work but was signed off by his GP again in May 2018 for ongoing anxiety and paranoia.  In August 2018 Direct Line obtained a medical report which confirmed that it would be difficult to see Mr Riley sufficiently perform his role in the near or medium future.

Therefore, Direct Line called a meeting with Mr Riley to discuss the potential termination of his employment, with the insurers still paying him 80% of his normal salary despite no longer being employed by Direct Line. Mr Riley was happy with the proposal and his only query was whether payments would be made up to his retirement age. It was agreed that HR would investigate this and later confirmed that the payments would indeed be made until the state pension age.

Mr Riley went on to proactively pursue the option of this scheme and agreed to the termination of his employment because he wanted to take advantage of it as it was confirmed that payments would continue until state pension age.

Mr Riley then brought proceedings for unfair dismissal and disability discrimination against Direct Line.

In the first instance, the employment tribunal found that the termination was not a dismissal because it was consensual between the parties and therefore it could not amount to an unfair dismissal.

Consensual termination – legal framework

In order to bring a claim for unfair dismissal, first and foremost there must have been a dismissal. Direct Line argued that there was in fact no dismissal, as the termination of the contract of employment was given by freely mutual content of both the employer and the employee (Birch v University of Liverpool).

In order for the tribunal to assess whether this was the case in Riley, they had to look at the realities of how the contract was terminated rather than the form of the relevant transactions. It is important that there was no deceit, coercion or undue pressure on Mr. Riley during the process.

It is also important to note that there is a distinction between an employee consenting to the termination of their employment and consenting to be dismissed by their employer. In the latter for example, voluntary redundancy is still considered a dismissal, likely as a matter of fairness because entitlement to a statutory redundancy payment itself requires a dismissal under section 95 Employment Right Act 1996.

The tribunal’s decision

The tribunal found that the termination of employment was consensually agreed and there was therefore no dismissal. This was because Mr Riley proactively pursued the option, agreed to termination so he could take advantage of it and he clearly made an informed decision without any undue pressure being placed on him.

Mr Riley sought to rely on the fact that Direct Line sent him a termination letter which used the term ‘dismissal’ in it. However, in considering the reality and substance of the matter as opposed to the words used, the tribunal agreed with Direct Line that Mr Riley understood that it was a termination by agreement even though the word dismissal was used.

Accordingly, Mr Riley’s claim for unfair dismissal was rejected.

On appeal, the employment appeal tribunal also found that:

• that the ET had not failed to make reasonable adjustments in the way he was cross-examined and there had been no substantive unfairness in the hearing;
• that the ET had properly decided not to extend the time for the reasonable adjustments claims in view of his subsequent decision to agree to the termination of his employment rather than seeking to return to work.