When is a notice of termination of employment effective if it is posted to an employee? We consider the recent decision of the Supreme Court in Newcastle upon Tyne Hospitals NHS Foundation Trust v Haywood  UKSC 22, where the Court had to consider the date on which a notice of termination of employment, which was posted to an employee, took effect.
Ms Haywood was employed by Newcastle upon Tyne Hospitals NHS Foundation Trust (the Trust) as an associate director of business development. She was notified on 1 April 2011 that she was at risk of redundancy. During a consultation meeting, Ms Haywood informed the Trust that she was going to be on annual leave between 19 April and 3 May 2011 and indicated that she would be on holiday in Egypt for part of this period.
On 20 April 2011 the Trust issued letters confirming Ms Haywood's redundancy and giving notice to terminate her employment. The notice period was 12 weeks, which was in accordance with her contract and statutory minimum notice entitlement, and her employment was to be terminated on 15 July 2011.
The Trust issued three letters to Ms Haywood, as follows:
- One letter was sent by recorded delivery to her home address and, as Ms Haywood was not at home, a delivery slip was left at her house. Ms Haywood's father-in-law collected the recorded delivery letter from the post office on 26 April and left it at Ms Haywood's home on the same day. Ms Haywood returned home from her holiday in the early hours of 27 April and confirmed that she read this letter at about 8.30am on 27 April
- Another letter was sent by ordinary post but no specific findings were made as to when this letter was received
- The other letter was sent by email to the email account of Ms Haywood's husband. Mr Haywood read the email on 27 April.
The claim in this case arose due to the significance of when Ms Haywood's employment terminated. This was because Ms Haywood's 50th birthday fell on 20 July 2011 and if her employment terminated before that date, she would receive a lower pension than if her employment ended after her 50th birthday. It was accepted that notice of termination therefore needed to have been given by 26 April 2011 in order for the lower pension to be payable. Ms Haywood brought a claim in the High Court alleging that she was entitled to the more generous early retirement pension on the basis that her 12 week notice period did not begin until 27 April and expired on 20 July.
The High Court concluded that the notice of termination was only effective when it was actually communicated to Ms Haywood which, based on the findings made by the Court, was when Ms Haywood actually read the letter on the morning of 27 April 2011 on her return from holiday. On that basis, Ms Haywood had been employed on her 50th birthday and was entitled to the higher pension benefit. The Trust appealed to the Court of Appeal.
The Court decided by a majority to dismiss the appeal and uphold the original decision of the High Court. It concluded that, in the absence of an express term in the employment contract, if notice of termination is sent by post, it must be received by the employee in order to be effective and it cannot be implied that it is deemed to take effect on a particular date. In this particular instance, this took place when Ms Haywood read the letter sent by recorded delivery at approximately 8.30am on 27 April 2011. The Court also concluded that the notice of termination letter sent to Ms Haywood's husband was not effective, principally on the grounds that Ms Haywood had not given permission to send communications to that particular email address. The Trust appealed to the Supreme Court.
The Supreme Court decided by a majority to dismiss the Trust's appeal.
In the absence of an express contractual provision, the Supreme Court had to decide the implied contractual term as to when a notice takes effect. The Trust argued that there was a common law rule, principally derived from landlord and tenant cases, which provided that notice was given when the letter was delivered to its address. Countering this, Ms Haywood relied on the approach of the Employment Appeal Tribunal (EAT) in various employment cases to support her position that notice only took effect when it had actually been received by the employee and the employee had either read it or had had a reasonable opportunity of reading it.
By a majority of three to two, the Supreme Court preferred the arguments put forward by Ms Haywood and deemed that the approach taken by the EAT was correct because, amongst other things:
- The common law rule in non-employment cases was not as clear and universal as suggested. Receipt of the notice was always required, and arguably by a person authorised to receive it. Even after a statutory presumption of receipt at the address was introduced, this was rebuttable
- The Supreme Court placed value in the EAT being an expert tribunal familiar with employment practices, and Ms Haywood's contract with the Trust was concluded when the EAT cases were thought to represent the general law
- An employer could either make express alternative provision in the contract or ensure notice of termination was received in sufficient time to allow the employment to terminate on a specified day.
In a dissenting judgment, two of the judges found that the common law cases had long established a rule embedding an implied term into contracts of employment determinable on notice. Such contracts were only a sub-species of relationship contracts. The rule for relationship contracts was that written notice of termination was given when the document containing it was duly delivered by hand or post to the address of the intended recipient, regardless of whether either the intended recipient or his agent was there to receive it. The rule had a sensible and even-handed policy objective behind it, creating certainty for both parties and representing a fair allocation of risk.
Ms Haywood's claim – which is said to be worth around £400,000 - therefore succeeded.
This Supreme Court decision represents a final position on this matter, namely that a notice of dismissal by post starts to run from the date the letter comes to the attention of the employee and they have either read it or had a reasonable opportunity to do so (in the absence of an express term in the contract setting out when notice is deemed to take effect).
Employers would be best served to give a notice of dismissal in person, which would take away any ambiguity about the date of dismissal. This might be at a final redundancy consultation meeting or at a reconvened disciplinary meeting at which the decision to issue notice of termination is given verbally and the employee is sent a letter confirming the notice. Alternatively, a decision can be communicated verbally to the employee by telephone and followed up in writing.
Employers should also consider drafting contractual wording that stipulates when notice takes effect. However, it is worth noting this would not override the statutory calculation of the effective date of termination.