Terminating earlier than original leaving date


In this case, the Employment Appeal Tribunal (“EAT”) held that, where an employee gave notice of resignation and the employer made a payment in lieu of notice and brought forward the termination date pursuant to a contractual term in the employee’s employment contract, there was no dismissal for the purpose of section 95 of the Employment Rights Act 1996. The EAT also held that the circumstances in which the EAT will depart from its own previous decisions are tightly circumscribed; as a result, they were bound by a previous EAT decision in Marshall (Cambridge) Limited v Hamblin [1994] ICR 962.

The Claimant resigned on 16 April 2019 by giving nine months’ notice which would expire on 16 January 2020. He continued to work his notice period but on 19 December 2020, the Respondent invoked a clause in the Claimant’s employment contract which purported to allow the Respondent to “terminate the employee’s employment forthwith” by paying the Claimant’s salary, excluding bonuses to which the Claimant would have been entitled during the remainder of the notice period, bringing his employment to an immediate end. The Claimant bought a claim of unfair dismissal.

In the Employment Tribunal (“ET”), it was held that the Claimant had not been unfairly dismissed or dismissed at all. The Judge cited Marshall (Cambridge) Limited v Hamblin, in which the employer had relied on a contractual term permitting it to waive or shorten the period of notice to bring forward an employee’s termination date following that employee’s notice of resignation. In that case the EAT had held that the resignation did not become a dismissal as a result of the employer’s exercise of its contractual right to bring forward the termination date and make a payment of salary in lieu of the outstanding balance of the notice period. The Claimant appealed this decision.

The EAT dismissed the appeal. Although it expressed doubts about the reasoning in the earlier Hamblin case, it held that it was bound by the precedent set in that case. The decision was not manifestly wrong in law as there were arguments that might reasonably be advanced in its defence that themselves were not manifestly wrong, even though the case had not been decided on the basis of those arguments. Therefore, where an employee has handed in their resignation and later the employer invokes a clause in the employment contract to terminate the employment before the end of the notice period by making the necessary payments by reference to the remainder of the notice period, it remains arguable that this does not amount to dismissal. However, permission to appeal has been sought from the EAT and a decision from the Court of Appeal may end the scope for such an argument.

Claims of this type are relatively rare, as in most cases compensation will be limited to a basic award plus any financial loss suffered in the period between the date of early termination and the date on which notice would originally have expired. Where an employee has been paid in lieu of notice, such loss is likely to be minimal unless substantial additional sums (such as bonus payments) would otherwise have been payable in the interim period and are not included in any payment in lieu.