A Judgment handed down by the Employment Appeal Tribunal ("EAT") highlights just how important it is to establish an employee's final date of employment and the risks for employers in getting it wrong.

Employers need to know the effective date of termination of an employee's employment ("EDT") for things like the P45, but the EDT also plays a crucial part in determining what employment rights an employee may have.

In Radecki v Kirklees Metropolitan Borough Council, Mr Radecki began working as a teacher in September 2005. He had only been employed for a few weeks when he was suspended, on 21 October 2005, after a number of concerns had been raised about his performance.

After some considerable delay, disciplinary proceedings against Mr Radecki were eventually commenced in April 2006 but then postponed, while a compromise agreement was negotiated. An unsigned draft copy of the agreement, headed "without prejudice and subject to contract", stated that the employee's employment would "terminate by mutual consent on 31 October 2006".

The Council proceeded to remove Mr Radecki from its payroll on 31 October 2006, with his knowledge, but prior to the conclusion of the compromise agreement. However, the negotiations fell apart and, on 22 February 2007, Mr Radecki informed his employer that he was not prepared to sign the agreement. In a reply dated 5 March 2007, the Council informed him that it considered that his employment had come to an end on 31 October 2006, the date that had been mutually agreed between them. Mr Radecki commenced proceedings in the employment tribunal on 7 March 2007 citing 5 March 2007, the date of the Council's letter to him, as his EDT. The claim was dismissed for being lodged out of time on the basis that the tribunal found that the EDT was in fact 31 October 2006, when the Council had removed Mr Radecki from its payroll.

The EAT, however, reversed that decision and held that the removal of Mr Radecki from the Council's payroll, even with his knowledge and arguably his consent, did not in itself terminate the employment relationship. The EAT stated that not until the employer's letter of 5 March 2007 was there a "sufficiently unequivocal statement" that could be regarded as terminating the employment relationship. As such, the claim was well within the 3 month time limit and would be allowed to proceed.

This is just about as bad as it could have been for the Council. First of all, the delay in setting up the disciplinary proceedings and then conducting negotiations took Mr Radecki over the 12 months continuous service qualification required for an unfair dismissal claim, even on the Council's own EDT of 31 October 2006. But with the EDT being found to have been on 5 March 2007, the Council has to defend the claim because it was lodged in time. There is also the issue of Mr Radecki's wages from 1 November 2006 to 5 March 2007.

There are a number of lessons to be learned by this case, in particular the need to avoid unreasonable delay in dealing with disciplinary matters (an express requirement of the statutory disciplinary and dismissal procedures) and to avoid complacency when negotiating compromise agreements; it's not over until the compromise agreement is fully signed by both sides!