Although terminating someone’s employment on the grounds of ill-health can constitute a dismissal, the EAT held in Riley v Direct Line Insurance Group Plc that it was clear from the facts that Mr Riley had not been coerced into terminating his employment in any way. On the contrary, it had been terminated by mutual consent.
Basic facts
Mr Riley, who has autism spectrum disorder, was off work from 2014 to October 2017 with anxiety and depression. During this time, he was paid 80% of his salary under his employer’s private health insurance scheme, which was provided by UNUM. After a phased return to work, he went off sick again in May 2018 and was subsequently assessed as unfit to work.
Following a series of meetings, it was agreed that he would end his employment with Direct Line and start to receive payments under the UNUM scheme which would continue until state pension age. He was informed by letter dated 25 September 2018 that he had been dismissed with effect from 19 September on grounds of capability due to ill health.
In November 2018, Mr Riley brought claims of unfair and discriminatory dismissal (among other things) on the basis that he had not understood what was going on in the meetings and had been “tricked” by the company to agree to his dismissal. For its part, Direct Line argued that his employment had terminated by mutual agreement.
Tribunal decision
Rejecting the argument that Mr Riley had been tricked in some way by Direct Line, the tribunal found that not only had he proactively pursued the UNUM scheme option, but he had also agreed to the termination of his employment because he understood that it was to his advantage to do so.
It also found that he had made an informed decision and that no pressure was placed on him. Although the termination letter referred to “dismissal”, it accepted the company’s argument that it was the substance of the agreement and not the words used that mattered. In short, Mr Riley had understood that it was a termination by agreement, whatever the terminology used. As the termination of his employment was consensual, he had not been dismissed and could not, therefore, claim unfair and discriminatory dismissal.
EAT decision
The EAT held that, when hearing claims for unfair dismissals, tribunals must consider the following points:
- The identity of the party who terminated the contract;
- The fact that termination is not a dismissal if both parties freely consent to it;
- The need for evidence to show that there was no deceit, coercion or undue pressure such as the threat of dismissal by the employer;
- The reality of how the contract was terminated;
- The understanding that there is a distinction between an employee consenting to the termination of their employment and consenting to being dismissed by their employer.
The EAT concluded that there was ample evidence in this case for the tribunal to find that both parties had freely given their consent to the termination of Mr Riley’s employment. Indeed, it had gone to considerable lengths to satisfy itself that Mr Riley was not tricked or coerced in any way and that he had freely participated in the discussions, was given time, and fully understood what he was doing.
Although the tribunal had not distinguished between agreeing a termination and agreeing to be dismissed, the EAT held that it had already found that the termination was agreed on 19 September, before the company had written the letter dated 25 September.
The EAT, therefore, dismissed the appeal.