When will an employee’s employment terminate if they do not receive a termination letter until they return from a holiday? The U.K. Supreme Court examined this issue, and announced a new rule requiring actual notice, in the recent case of Newcastle upon Tyne NHS Foundation Trust v Haywood [2018] UKSC 22.

The plaintiff, Ms. Haywood, was informed by her employer in April 2011 that she was at risk of a layoff. The employer subsequently decided to terminate her employment, subject to a contractual notice period. A letter notifying her of this decision was sent to her home address with delivery confirmation. However, Ms. Haywood was on vacation at the time—which her employer was aware of—and could not immediately read the letter. Upon her return from vacation, Ms. Haywood promptly read the letter, learning that she was being laid off and her notice period would begin.

The reason this case was fought all the way up to the U.K. Supreme Court is that Ms. Haywood would be entitled to a significantly more generous pension if her employment ended after her 50th birthday—and termination would be effective either before or after this milestone depending on when her notice period expired. If her notice period began when the letter was sent (or a few days thereafter), her employment would have ended before her 50th birthday. If her notice period began when she read the letter, however, employment would end after her birthday and she would be entitled to the more generous pension.

The Supreme Court found that in the absence of an express contractual provision governing when notice of termination sent by letter is deemed to be effective, actual notice is required. In other words, notice will take effect in such circumstances only when the individual reads the letter or when he or she has had a reasonable opportunity to read it. (As to the latter scenario, individuals in a similar position who wait an unreasonable length of time before reviewing post-vacation mail may be prevented by their unreasonable delay from arguing that notice began when they read the letter). As a result, Ms. Haywood’s dismissal did not take effect until after she turned 50, and she was therefore entitled to the higher rate of pension.

In light of this holding, employers operating in the United Kingdom should consider including express terms on this point in their employment contracts. Agreements could specifically set out when notice of termination will be deemed to be effective, providing clarity for all parties involved and avoiding the default rule established by the court. In addition, U.K. employers can also minimize risk by:

  • Communicating notice in person (and following up with a letter);
  • Requesting return receipts on emails;
  • Ensuring all email address and postal address details are correct; and
  • Following up on any letters sent with a phone call to confirm receipt.