The claimant resigned having to give nine months’ notice which have meant his employment ending on 16th January 2020.   The respondent invoked a term (pay in lieu of notice) in the contract allowing for the employment to be terminated (following resignation) by paying the salary, excluding bonuses that the claimant would have been due during the remainder of the notice period.  This occurred in December 2019.

The claimant brought a claim for unfair dismissal.  The primary issue was whether the actions of the respondent constituted a dismissal.   At first instance, the Tribunal followed the decision in Marshall (Cambridge) v Hamblin [1994] which stated that invoking such a contractual term to allow for a contract to be terminated where notice has been given did not amount to a dismissal.  The claimant appealed that decision, arguing that the Marshall decision was manifestly wrong and should not be followed.

The EAT examined the decision in Marshall and stated that it was not decided per incuriam (i.e. a lack of due regard for the facts or law). The claimant argued that the case of West Midlands Cooperative Society v Tipton ought to have been followed in Marshall.  However, the EAT stated this was not the case on the basis that Tipton was decided on different facts and was related to a different legal point (relating to summary dismissals).  The EAT followed the reasoning in Marshall that when such a contractual term was invoked it only had the effect of altering the date that the resignation took effect rather than amounting to a new dismissal date.  As the outcome in Marshall was ‘reasonably arguable’ it could then not be decided that the decision was manifestly wrong thus allowing the EAT to go a different way.    The EAT did acknowledge some reservations about the decision in Marshall but those reservations were not sufficient for meeting the relatively high threshold of being manifestly wrong.  As a result, the appeal was dismissed, and it was held that the claimant had not been dismissed in this situation.

Practical Lessons

This case demonstrates a quite technical point that a dismissal will not occur where the claimant has given their notice and a contractual term allows for the respondent to cut that short and provide payment to cover the rest of the period. This does provide some latitude to employers in that respect.  It should be noted though that there were reservations from the EAT in terms of the application of Marshall largely on the basis that it gives too much power to the respondents in bringing the employment to an end.  It would be very interesting to see the approach of the Court of Appeal if it were appealed again. 
https://www.bailii.org/cgi-bin/format.cgi?doc=/uk/cases/UKEAT/2022/36.html&query=Fentem+v+Outform+EMEA+Ltd+.2022.