The Supreme Court have today held that, in the absence of an express contractual term specifying when the notice was to take effect, a letter giving an employee notice of termination was not effective until the employee read it on their return from holiday.

Almost exactly a year ago, we reported that the Court of Appeal had reached the same conclusion. The Supreme Court has now upheld the Court of Appeal’s decision and dismissed the employer’s appeal. On the somewhat unusual facts of this case, the date the dismissal took effect was of crucial importance to the amount of pension benefit the employee was entitled to receive.

Factual background

Ms Haywood was employed by an NHS trust as an associate director of business development. She was placed at risk of redundancy and, during a consultation meeting, reminded her employer that she would shortly be on leave for two weeks to include a holiday in Egypt. Shortly after her holiday commenced, the trust issued three letters confirming Ms Haywood's redundancy and gave her 12 weeks’ notice to terminate her employment. One letter was sent by recorded delivery (which was collected by her father and left unopened at her home address). The second letter was sent by ordinary post and the final letter was sent by email to her husband’s email account (which remained unopened until their return from holiday). Ms Haywood read the recorded delivery letter on the morning she returned from holiday.

The date of termination was of crucial importance to Ms Haywood’s pension entitlement because of the close proximity of her 50th birthday, which meant that if termination was only effective when she read the letter, she was entitled to a far higher pension (amounting to a difference of circa £250,000).

Both the High Court and Court of Appeal held that the notice of termination was only effective when it was actually communicated to Ms Haywood, which was when she actually read the letter on the morning of her return from holiday. On that basis, Ms Haywood had been employed on her 50th birthday and was entitled to the higher pension benefit. Her NHS trust employer appealed to the Supreme Court.

Supreme Court decision

The Supreme Court, by a majority, held that the approach which had been consistently taken by the lower courts and tribunals was correct and there was no good reason to disturb it. There was no irrebuttable presumption that a notice has been received by the employee once it has been delivered to their home address. In the absence of an express term in the employment contract, notice of termination sent by post must be received by the employee in order to be effective, and it cannot be deemed to take effect on a particular date.

What does this mean in practice?

To minimise the risks associated with the uncertainty of knowing when an employee has actually received and read a letter of termination, employers may wish to include express provisions in the contract specifying when notice is deemed to be received and effective. Alternatively, it may be sensible to communicate notice in person by physically handing the termination letter to the employee.