There exists a long established principle that a party who has properly given notice of termination has no right to withdraw it. However, there is a "special circumstances" exception which entitles the recipient of the notice not to take what is stated at face value. The most common example of this is a "heat of the moment" resignation. Today, the Court of Appeal (CA) has handed down its decision in Willoughby v C F Capital plc in which it re-examines the principles underlying the "special circumstances" exception where an employer had given notice to an employee by mistake.
W had some discussions with K, her line manager, about the possibility of her becoming self-employed as a way of avoiding redundancy. Although the tribunal found that there was a misunderstanding on just how far those discussions had gone, the Court of Appeal found that there was no such misunderstanding: W wanted to know more about the opportunity open to her and that was K's understanding of the situation. Nonetheless, on 22 December 2008, K wrote a letter to W which terminated her employment with effect from 31 December 2008, but which also assumed she would be re-engaged on a self -employed basis on the terms contained in a written agreement enclosed with the letter. This letter was sent even though the exact terms of the self-employment were never discussed, and the further details requested by W about it were never provided. W did not accept the self-employment but did accept that she had been dismissed. When C F Capital re-opened on 5 January after the Christmas break, K sought to rectify the situation by saying that W could go back to her old role. However, W brought a claim in the employment tribunal for wrongful and unfair dismissal and C F Capital argued she had resigned rather than been dismissed.
The tribunal found that "special circumstances" meant that the letter of 22 December did not terminate W's employment, as there had been a genuine misunderstanding between the parties as to what had been agreed. Although "without more" the letter would amount to a dismissal, a reasonable person in W's situation would have concluded that there must have been a mistake. Further, C F Capital had sought to retract its position within a reasonable period of time.
The EAT allowed W's appeal and declared that she had been dismissed, confirming the "exceptional nature" of the special circumstances required if K's letter was not to be given effect. The mere fact of a mistake by the employer is not of itself a special circumstance. The correct question for the tribunal was whether W was entitled to consider the letter of 22 December as a conscious, rational decision. Finally, the tribunal had been wrong to consider C F Capital's attempted retraction of the dismissal as taking place within a reasonable period of time. The intervention of the holiday period was not a valid excuse in these circumstances.
CFC based its appeal on the basis firstly that the EAT had wrongly focussed on the intention of CFC rather than on whether W ought to have been aware that the words of termination should have been taken at face value and secondly that the EAT took too narrow a view of the 'special circumstances' doctrine and wrongly concluded that the concept of mistake, apparently in any circumstances, had no role to play.
The CA held that, as K intended to dismiss W by its letter of 22 December, it could see no basis for the application of the special circumstances exception. Although the giving of notice may have been a mistake, K knew that W had not agreed to be dismissed, though he did perhaps have a mistaken expectation that she would accept the proposed self-employment terms. The notice, being clear and unambiguous, terminated W's employment and could not be unilaterally withdrawn.
The 'special circumstances' exception will almost invariably, according to the CA, arise in cases in which the purported notice has been given orally in the heat of the moment by words that may quickly be regretted. Consequently, it will be appropriate, in those cases, to allow the giver what is in effect a 'cooling off' period before acting upon the notice to allow the giver of the notice the opportunity to satisfy the recipient that he never intended to give it in the first place. However, those cases are relatively rare.
You can see the case here: C.F. Capital PLC v Willoughby