unfair dissmissal

Was it unfair dismissal or a termination by mutual consent?

Was it unfair dismissal or a termination by mutual consent?

The Employment Appeal Tribunal (‘EAT’) has issued a judgment on the case of Riley v Direct Line Insurance Group plc, finding that the tribunal was entitled to reject the employee’s unfair dismissal claim on the basis that the employment was terminated by mutual consent. 

The case

Mr Riley had taken a period of long-term sick leave from 2014 until 2017 and was enrolled in a private health insurance scheme to pay a proportion of his salary during this sickness absence. Mr Riley had attempted to return to work but was unsuccessful, and therefore went off sick again in May 2018. 

Direct Line held a meeting with Mr Riley on 31 August 2018, during which the option of Mr Riley exiting and receiving payments under the private health insurance scheme until state pension age was discussed. Mr Riley indicated that he agreed to this option in principle, however he wanted to further investigate the details of the scheme benefits. The parties continued to communicate until a final meeting on 19 September 2018, when Mr Riley’s employment was ended. On 25 September 2018, Direct Line sent a letter to Mr Riley confirming that he was dismissed from 19 September on grounds of capability due to ill health. 

Mr Riley submitted various claims to the employment tribunal, including for unfair dismissal. The employment tribunal rejected the unfair dismissal claim, stating that there was no dismissal within the meaning of s95(1)(a) of the Employment Rights Act 1996, as the termination was mutually agreed as opposed to being a termination by the employer. Mr Riley appealed the decision, stating that the employment tribunal had erred in finding that the employment was terminated by mutual consent.    

The EAT concluded from the evidence that the parties had consensually agreed to the termination of employment. The EAT stated that the relevant question arising from the law was always ‘who really terminated the contract?’ putting aside the other actions of the parties at the time of termination. This is a question of fact and degree and requires the tribunal to look at the reality of the correspondence between the parties, as opposed to the form. 

The EAT further stated that a tribunal needs to obtain clear evidence that a termination was consensual, and free from coercion or undue pressure, given that the consequence of this finding is that the employee loses the right to bring an unfair dismissal claim. The EAT found in this case that there was ample evidence that the termination was by mutual consent between the parties, and there was no evidence of Mr Riley being tricked or coerced and he fully understood what he was doing. 

Mr Riley also appealed to the EAT to decide whether the employment tribunal hearing was substantively unfair, because the tribunal had failed to make reasonable adjustments recorded in the case management orders. The EAT also dismissed this appeal, stating that the tribunal was not bound by the case management orders. Mr Riley had decided on the day of the hearing that he did not require the adjustments set out in the case management orders, the EAT held that the tribunal was reasonable in relying on Mr Riley’ decision regarding his own needs on the day. The EAT did not find any evidence that the claimant had suffered any substantive unfairness as a result of the tribunal not implementing the reasonable adjustments in the case management orders. 


This case highlights the importance of an employee being clear in their communications with employers regarding termination of their employment. 

It is not uncommon for employees and employers to discuss ending an employment contract The EAT here drew a distinction between an employee consenting to the termination of their employment, and consenting to being dismissed by the employer. For example, in circumstances where employees volunteer for redundancy, they are volunteering for the employer to dismiss them, and this can still count as a dismissal for the purposes of the s.95(1)(a) of the Employment Rights Act. In order for an employee to succeed in an unfair dismissal claim, they need to be able to establish that they were dismissed within the meaning of s.95(1)(a).  

This blog was written by Yavnik Ganguly, Solicitor at didlaw