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If an agency employer fails to find work for an employee, could this be considered a dismissal?

In most cases, it is clear when a dismissal has taken place, as employers tend to communicate this quite clearly to their employees, whether orally or in writing.

However, dismissal situations are not always that straightforward, and there have been a number of employment tribunal cases over the years which have explored whether an employer’s notice of dismissal can be effective if an employee has not received this, for example, where an employee has not received or read a dismissal letter. The general principle is that notice of dismissal will not be effective until it is actually received by an employee. This means that an employer must take care when giving notice of dismissal to ensure that it is properly given and communicated to the employee.

However, a recent EAT case explored whether a dismissal could arise without an agency employer giving specific notice of dismissal, as a result of the agency having failed to find work for its employee. In that situation, could the employee treat themselves as dismissed and bring a claim for unfair dismissal?

In this case, the employee was employed by an employment agency but worked on assignment at another company. When that assignment ended, the agency took no steps to find an alternative assignment for the employee. The employee did not contact the agency regarding this, and the agency, therefore, assumed that she was not interested in further agency work.

The employee went on to bring an unfair dismissal claim, and the employment tribunal and EAT had to consider whether a dismissal had taken place in those circumstances.

Fortunately for the agency, and for other employers, the EAT decided that there had been no dismissal in circumstances where:

• The agency had not communicated notice of dismissal to the employee; and
• The employee had not resigned.

The EAT made clear that a dismissal could not be “implied” from the agency’s failure to find further assignments for the employee. As a result, the employee was still employed by the agency at the time she brought the unfair dismissal claim, and the claim failed. 

What does this mean for you or your business?

The EAT’s decision is a welcome one for employers, especially employment agencies and business which employ zero hour workers.

It means that, for your employee to prove that there has been a dismissal, you must have clearly communicated your intention to dismiss them. The fact that you have failed to offer them work, particularly in circumstances where they have not complained about this, does not mean that they can treat themselves as dismissed.

The caveat to this principle is, of course, that you have an implied duty of trust and confidence to your employees, which essentially requires you to behave in a fair and reasonable manner. This would include making reasonable attempts to find them work, especially where they do contact you about this.

If you unreasonably fail to offer an employee work, especially if you are aware that they want such work, this could potentially entitle the employee to resign and treat themselves as constructively dismissed, so you still need to tread carefully.

What do you need to be doing now?

  1. If you are an employment agency or a business which employs zero hour workers, you should review on a regular basis the employees on your books, particularly if they have not carried out assignments for a period of time, to establish if you still want to offer them work and/or if they still want to work for you. If not, either you or they will need to give proper notice for the employment to come to an end. Otherwise, the employment relationship could drift on indefinitely, which could lead to those employees continuing to accrue holiday etc.
  2. Ensure that you have a clear policy and procedure in place for dismissing employees, including how you prefer to communicate notice of dismissal. It is often preferable to communicate notice of dismissal verbally and/or to hand deliver a dismissal letter to the employee, so that there can be no dispute that notice has been given. Recorded delivery can also be useful, provided that the employee themselves signs for the letter.
  3. Make sure that any notice of dismissal is clear and unequivocal.
  4. If you intend to terminate employment immediately on payment in lieu of notice, you must inform the employee clearly of this. Making a PILON into their bank account without informing the employee that you have done so and why will not constitute a dismissal.
  5. If in doubt regarding whether an employee has given notice or you have given an employee notice, seek legal advice.

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.

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