The Court of Appeal has ruled that, where an employer gives notice to terminate an…

The Court of Appeal has ruled that, where an employer gives notice to terminate an employment contract, notice will only be deemed to have been given when the employee personally takes delivery of the notice (unless the contract states otherwise).

Background

The rules governing the termination of an employment contract are normally set out in the contract itself. Subject to statutory minimum notice periods, the parties are generally free to agree what period of notice will apply and how notice is given.

Typically, an employment contract might say that the employer must give “not less than x months’ notice in writing”. But when does the notice period actually start? Is it when the employer sends the termination letter to the employee, when it arrives at the employee’s address or when the employee actually sees it?

In Newcastle-upon-Tyne NHS Foundation Trust v. Haywood, the employee’s role was placed at risk of redundancy following a merger of NHS bodies. She had a contractual notice period of 12 weeks. Following the initial redundancy meeting, she began sick leave on 13 April 2011, which she said was caused by the stress of the meeting. On 18 April, she began a period of annual leave and, with the employer’s knowledge, flew to Egypt on 19 April.

On 20 April, the NHS Trust sent copies of a letter giving notice of termination to the employee’s home address by recorded delivery and standard post. A further copy was sent by email, to her husband’s email account. The letter purported to give 12 weeks’ notice, expiring on 15 July.

However, the employee did not personally receive the letter until she arrived home from holiday on 27 April. She contended that notice did not start until she had seen it (and therefore expired on 22 July). This was important because the employee’s 50th birthday was on 20 July, which entitled her to a higher pension provided she was still employed on that date.

The High Court determined that, as there was no express term in the employment contract confirming when notice was deemed to begin, it was only effective when communicated to the employee (that is, when she read the letter). The NHS Trust appealed this decision.

Court of Appeal decision

The Court of Appeal upheld the High Court’s decision (although only by a 2:1 majority, with one appeal judge disagreeing).

In particular, it said the following:

  • there is a requirement that employees need to know where they stand. Notices of all kinds in employment contracts need to be communicated to the employee, as certainty is paramount;
  • employment contracts are based on the private rights of parties and therefore cannot be treated in the same way as commercial contracts (where notice can be validly given when it is sent and received, even if it has not yet been read); and
  • a notice delivered to an employee’s home may not come to her attention through no fault of her own. Once it has been delivered, it will be deemed to have been communicated unless the contrary is proved. Therefore, it is up to the employee to demonstrate that she did not see the notice until some later date (which is what happened in this case).

Comment

This decision is unhelpful from an employer’s perspective and is likely to cause some confusion. In many cases, the employment contract will not specify when notice is deemed to have been communicated to the employee. This leaves the door open to an employee to argue that they have not personally received notice of termination, even if the employer has taken appropriate steps to ensure effective delivery.

It is interesting that one of the three appeal judges disagreed with his two colleagues. In his dissenting judgment, he concluded that there is “no repugnancy between the valid service of a notice which has not been read and an employment contract”. In other words, there is no need to apply special rules to employment contracts, when in many areas of the law contracts work perfectly well on the basis that notice is given when it reaches its intended destination. He also noted that there is a need for a reasonable degree of certainty about when notice is given, but that applies to both the employer and the employee.

Further, the two appeal judges who provided the majority decision reached their conclusion for different reasons. So there remains a degree of uncertainty as to how the law may develop further in this area.

In the meantime, employers who wish to give written notice of termination to an employee who is absent from the office will need to take additional care to ensure that it has been “communicated”. In this case, the NHS Trust sought to do this by using various methods, including special delivery and email. However, they did not help themselves by sending notice of termination when they knew the employee would be away from home on holiday (and therefore unable to receive it).

We recommend that documents sent by email should be accompanied by a delivery receipt and a read receipt. If the timing of communication is particularly crucial, employers should consider sending the letter by courier (where it can be signed for) or even instruct a specialist process server. This may make it more difficult for the employee to demonstrate subsequently that they did not personally receive it.