Case study: Riley v Direct Line Insurance Group PLC
This case illustrates the distinction between ‘dismissal’ and ‘termination by mutual consent’.
R was an employee for Direct Line. R had an autism spectrum disorder, which, combined with periods of depression and anxiety, had resulted in him being absent from work between 2014 to 2017. Direct Line worked with R to try to enable him to return to work. R was referred for a medical assessment which determined that R would never be able to return to his role.
Following this outcome, Direct Line told R of a scheme with its insurance provider which, in the event of incapacity, would cover his salary, although such a scheme would mean that his employment would then be terminated. R agreed to join. Once this was agreed and finalised, Direct Line sent him a letter confirming the arrangements, in which they mistakenly referred to him as being ‘dismissed’ on grounds of capability.
R then brought a variety of claims against Direct Line, including claims of disability discrimination and unfair dismissal. The Employment Tribunal (ET) found that the termination did not amount to an unfair dismissal on the basis that there was a consensual decision made by both parties. R appealed to the Employment Appeal Tribunal (EAT).
The EAT upheld the ET’s decision. Key facts considered included:
- As part of the initial briefing about the insurance scheme, Direct Line had explained its implications, which included the termination of R’s employment.
- Direct Line stressed the need for R to make an informed decision in follow up emails, which again clarified that his acceptance would mean that his employment would be terminated.
- R had also liaised directly with the insurance provider as to the arrangements, demonstrating that R had an awareness of the implications of the scheme on the ending of his employment.
- R stated that he understood that his employment was being terminated during the final meeting with Direct Line, and requested confirmation of the same in writing.
The EAT stressed the importance of looking at ‘the substance of the matter and not the words used’ when looking at ‘freely given mutual consent’. Through a review of all the evidence, it was held that there was nothing to suggest coercive behaviour on behalf of Direct Line, or that R had been deceived into entering into the scheme. There was clear evidence to demonstrate that R had been proactive in entering the scheme and consented to the termination of his employment ‘because he wanted to take advantage’ of the scheme.
The EAT ruled that Direct Line’s erroneous letter which had the incorrect reference to R being ‘dismissed’ was not sufficient evidence to contradict the wider scope of the matter to prove that R had been unfairly dismissed.
This case is a useful reminder to keep detailed records in case a dispute should arise in the future. Documentation of the process, including email correspondence and minutes of meetings, enabled Direct Line to clearly show that R was aware that by agreeing to the insurance scheme, his employment would end. Good record keeping therefore enabled them to successfully defend the claims. A word of caution however; given the imbalance of power, only in very rare circumstances like this will a Tribunal agree that an employee has consented to being dismissed where there is little prospect of a return to work.