When does notice take effect?

The Supreme Court has handed down its judgment in a case that concerns when contractual notice takes effect.

Newcastle upon Tyne Hospitals NHS Foundation Trust v Haywood [2018] UCSC 22

Facts

The case considered the question of at what point written notice of termination takes effect. Is it when the letter is received by the employee, or when the employee has had the opportunity to read the letter?

In Mrs Haywood’s case, the date notice took effect made a significant difference to her pension entitlement. If her employment terminated on or after her 50th birthday, she was entitled to an enhanced early-retirement pension. Last year, the Court of Appeal confirmed that in circumstances where the employee had been away on holiday, the letter giving her notice of termination only took effect after her return, when she had had an opportunity to read it (see our previous briefing). 

Supreme Court decision

The Supreme Court has, by a majority, upheld the Court of Appeal’s previous decision. If an employee is dismissed on notice by post, and there is no express contractual provision governing when notice takes effect, contractual notice only starts to run when the letter giving notice has come to the attention of the employee and they have either read it or had a reasonable opportunity to do so.

According to the Supreme Court, notice only started to run from the day after Mrs Haywood returned from holiday, when she read the letter, meaning that termination took effect on the day of her 50th birthday.

Consequences

The effect of the court’s decision is to imply a term into all contracts of employment that notice to terminate the contract will only run from the date the employee has read the letter giving notice (or has had a reasonable opportunity to do so).

How can employers mitigate the effect of this decision? First, it is usually advisable (where practicable) to inform the employee of their dismissal in person, before confirming it in writing. Where this is not possible, sending notice by recorded delivery will assist in demonstrating that it has been delivered – it would then be for the employee to show why they did not have a reasonable opportunity to read the letter. Finally, employers should consider including an express contractual provision to make it clear when notice is deemed to take effect (for example, two days after posting). This would override the implied term, and would be of particular assistance in circumstances such as Mrs Haywood’s, where a valuable benefit hinges on the date of termination.

Note that this case only concerned the timing of notice for the purpose of terminating the contract. Different considerations may apply to identifying the ‘effective date of termination’ for statutory purposes, for example, to calculate the qualifying period for claiming unfair dismissal. It is likely, however, that the Supreme Court’s decision in this case will be cited in future cases where the ‘effective date of termination’ is disputed.

The content of this article is for general information only. For further advice, please contact Liz Stevens or another member of Birketts’ Employment Law Team.

This article is from the May 2018 issue of Employment Law, our monthly newsletter on employment legislation and regulation. To download the latest issue, please visit the newsletter section of our website. Law covered as at May 2018.

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