When Is Termination Notice Effective In Employment Contracts?

There are many reasons why it is important to know when a termination notice in an employment contract has been effectively given to an employee, including:

• It will determine when the employer can stop paying wages
• When the employee should no longer attend work
• If a claim for unfair dismissal is made, what the deadline for bringing that claim will be

There may also be circumstances, such as in the case below, where the timing of the termination notice can have a significant impact on pension entitlements and other employee benefits.

However, where the termination notice is not given face to face, uncertainty can arise about when it is actually communicated to the employee. The Supreme Court has recently provided guidance on this issue which may cause employers to reflect on the way in which they serve notice to its employees.

Timing Of Employment Termination Notice

Newcastle Upon Tyne NHS Foundation Trust v Haywood

This case concerned an Associate Director of Business Development, who was due to celebrate her 50^th birthday on 20 July 2011. Her pension entitlements were such that if she were to be made redundant after the age of 50 she would be entitled to a significantly better package. Ms Haywood was contractually entitled to be given 12 weeks’ notice, but her contract was silent about when notice would be deemed to have been given.

In April 2011, Ms Haywood was told she was at risk of redundancy and on the 19^th April 2011, she went on holiday. On the 20^th April, her employer sent notice of termination by recorded delivery and ordinary post but she did not read this notice until she returned from holiday, on the 27^th April. In order for her to have been given the necessary 12 weeks’ notice prior to her 50^th birthday and for the employer to have avoided the higher pension entitlement, the notice must have been effectively given before 27^th April.

The question before the Supreme Court was when was the notice effective? Was it:

1. When the letter would have been delivered in the ordinary course of post;
2. When it was in fact delivered to that address; or
3. When it came to the employee’s attention and been read.

The Supreme Court decided that the final option was correct in that the notice was effective when it was actually received by the employee and she had read it (or at least had a reasonable opportunity to do so). Therefore, it was not deemed effective until 27 April, and Ms Haywood was entitled to the higher pension.

Comment

This decision highlights that employers could be opening themselves up to a level of uncertainty if they decide to rely on methods such as post or email to communicate notice. Once the letter has been placed into the post box, when it is delivered and read by the employee is taken out of the employer’s hands.

Following this case, to ensure that they remain in control, employers may want to consider including provisions in the contract of employment that stipulate when notices will be deemed to have been received by employees or adopting a practice of meeting with employees face to face to give them notice in person.

How Nelsons Can Help

For further information or to comment on this article, please contact our employment law specialists on 0800 024 1976 or via our online form.