The Supreme Court has recently confirmed, in the case of Gisda Cif v Barratt, that where dismissal is communicated to an employee in a letter, the contract of employment does not terminate until the employee has actually read the letter or has had a reasonable opportunity of reading it.
Ms Barratt was suspended from her employment with Gisda Cif, a small charitable organisation, following alleged inappropriate behaviour at a private party. At the conclusion of a disciplinary hearing, Ms Barratt was told that she would receive a letter on Thursday 30 November 2006 which would inform her of the outcome of the hearing. Ms Barratt was aware that she was at risk of being dismissed.
Ms Barrat's sister had given birth to a baby a week earlier and early on 30 November 2006 she travelled to London to visit her sister. Later on the same day, a recorded delivery letter arrived for her at her home. Although it was signed for by her boyfriend's son, it remained unopened as Ms Barratt had not left any instructions for him to open it or read it.
Ms Barratt did not return home until late on 3 December 2006 and did not open the envelope until the following morning on 4 December 2006, when she had asked her boyfriend and his son whether any post had arrived. Upon reading the letter, she discovered that she had been summarily dismissed for gross misconduct. She subsequently presented a claim for unfair dismissal on 2 March 2007.
The principal issue central to the dispute was deciding Ms Barratt's effective date of termination. An employee has a period of three months from the effective date of dismissal in which to bring a claim for unfair dismissal. If the effective date of termination was on 30 November 2006 when the letter had arrived, her claim would have been brought out of time. If, however, the effective date of termination was 4 December 2006, her claim would have been in time.
Section 97 (1) of the Employment Rights Act 1996 provides: -
"… in this Part 'the effective date of termination'—
(a) in relation to an employee whose contract of employment is terminated by notice, whether given by his employer or by the employee, means the date on which the notice expires,
(b) in relation to an employee whose contract of employment is terminated without notice, means the date on which the termination takes effect …"
Ms Barratt had been dismissed without notice and her case was therefore governed by sub-paragraph (b) above. The crucial question therefore was, when did the termination of her employment take effect? Was it when her employer decided to terminate the employment? Was it when the letter was sent? Was it on the day that it was delivered? Was it on the day that she read it? Or should the termination be regarded as having taken effect when she had a reasonable opportunity of learning of the contents of the letter? If so, when did that reasonable opportunity arise?
The Employment Tribunal held that the effective date of termination was 4 December 2006, and so the claim was brought in time. Gisda Cif unsuccessfully appealed to both the Employment Appeal Tribunal ("EAT") and the Court of Appeal.
As we reported in our September 2009 bulletin, the Court of Appeal upheld the decision on the basis that dismissal is considered effective when it has been communicated to the employee in accordance with the case of Brown v Southall & Knight (in that case it was held that where dismissal is communicated to an employee in a letter, the contract of employment does not terminate until the employee has actually read the letter or has had a reasonable opportunity of reading it). The Court of Appeal indicated that the legislation was to be construed in favour of the protection of employees, given that there may be some unforeseen event or circumstance which prevents an employee from being informed of the dismissal. Further, an employee should have the full three months under the 1996 Act to present a claim from their date of knowledge, not three months less a few days or weeks.
Gisda Cif brought a further appeal to the Supreme Court, and argued it was incorrect to fix the date of termination as the date of the employee's actual knowledge of the dismissal, or the date on which he or she had a reasonable opportunity to learn of it; rather, the effective date of termination should be when the employer had done all that was reasonably required of it to communicate the termination of the contract. Gisda Cif argued that there was no principle of contract law that required an employer to communicate the termination of the contract to the employee in order for the termination to take effect.
The Supreme Court dismissed Gisda Cif's line of argument and upheld the previous decision of the Court of Appeal on the following grounds:
- The effective date of termination is not a term of contract law but instead, a "statutory construct" in the Employment Rights Act. This Act is part of a charter protecting employees' rights. An interpretation that promotes those rights, as opposed to one which is consonant with traditional contract law principles, is to be preferred;
- The well established rule that an employee is entitled either to be informed or at least to have the reasonable chance of finding out that he has been dismissed before time begins to run against him is firmly anchored to the overall objective of the legislation.
Accordingly, it was held that Ms Barratt's effective date of termination was 4 December 2006 and thus her claim for unfair dismissal was presented in time.
As a matter of good practice, employers should notify an employee of the decision to dismiss them as soon as possible and by the most effective means. If employers choose to communicate the fact of dismissal by post, rather than in a face to face interview, employers should accept that the dismissal will only be effective when the employee knows of the dismissal or has a reasonable opportunity to learn of it, not when the letter is sent.