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28th April 2021

No binding agreement reached for transfer of company car on termination of employment

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In Evergreen Timber Frames Ltd v Harrington the employment appeal tribunal (EAT) considered whether a binding agreement had been reached between an employer and employee in respect of the transfer of ownership of the employee’s company car as part of severance discussions relating to the termination of his employment by reason of redundancy.

Prior to the termination of the claimant’s employment by reason of redundancy, severance terms were discussed which addressed transfer of ownership of his company car and computer, and a bonus payment if he worked his notice period. Before the claimant’s employment terminated, he was given a letter from his employer which confirmed that he would receive redundancy pay and be gifted his company car but was silent on his computer and bonus. In response, the claimant submitted an appeal letter in which he accepted the car but challenged the overall severance offer, which he viewed as being incomplete based on earlier oral discussions.

When ownership of the car was not transferred to the claimant he brought a breach of contract claim against his employer. The Employment Tribunal (ET) partially upheld the claim and awarded him damages to reflect the value of the car. The ET held that the claimant’s appeal served as acceptance of the employer’s letter albeit that it was subject to clarification. The employer appealed and the Employment Appeal Tribunal (EAT) found that the ET had erred in law in concluding that the claimant could accept part of the offer, while seeking to improve on other parts. The offer of the car did not stand on its own; it was made as part of wider employment termination discussions. The case was remitted to a fresh ET to consider whether there had been any oral agreement for transfer of ownership of the car reached at an earlier meeting.

This case is a useful reminder of the benefit of entering into settlement agreements with employees to formally set out the terms on which a settlement has been reached. This can help avoid situations like this where disputes arise as to what the final agreed terms are.

For more information on any of the items raised in this article please contact a member of the Employment Law Team.