When does an employer’s notice to terminate take effect
Where a contract is silent on when notice is deemed to be given when does an employer’s notice to terminate an employee’s contract become effective?
According to the Supreme Court in its recent decision in Newcastle Upon Tyne Hospitals NHS Foundation Trust v Haywood, not until the employee has read it or has had reasonable opportunity of doing so.
Mrs Haywood was informed that she was at risk of redundancy on 1 April 2011. Her contract of employment specified a minimum period of notice of termination of 12 weeks, but did not specific how notice should be served. During a consultation meeting on 13 April 2011, Mrs Haywood told the Trust that she had booked annual leave from 19 April to 3 May because she was going on holiday to Egypt. The Trust sent a letter by recorded delivery to Mrs Haywood on 20 April providing her with notice of termination of her employment. As Mrs Haywood was on holiday, the letter was left at the local sorting office and she did not read the letter until 27 April. As both parties were aware, if her employment terminated before her 50th birthday on 20 July 2011, her pension entitlement would be significantly reduced.
Mrs Haywood issued High Court proceedings claiming that her notice was not effective until she had read the notice of termination on 27 April 2011.
Supreme Court Decision
The High Court upheld Mrs Haywood’s claim and the Trust’s appeal was dismissed by the Court of Appeal and the Supreme Court. In its appeal the Trust had argued that, where a contract was silent on the point, under common law, notice is effective when a letter is delivered to its address. The Supreme Court disagreed with this and held that receipt of notice is always required, emphasising the fact that an employee needs to know whether and when he/she has been dismissed and this cannot be established unless an employee has read a notice to terminate. Therefore, where a contract is silent on when notice takes effect, it will not do so until an employee has read the notice or has had reasonable opportunity to do so.
What this means for employers?
This case clearly highlights the importance of clear contractual provisions about when notice is deemed to take effect in order to ensure there is no confusion. Without such provisions notice will not be deemed to take effect until the employee has read the notice.
Where current contracts do not have such contractual provisions, employers should take steps to confirm receipt of letters of termination, in order to ensure that notice has been effectively given. Ideally, in order to eliminate the risk of any future issues, wherever possible, notice should be delivered in person so there is no uncertainty as to whether or not the employee has actually read the written notice.