Avoiding pitfalls when issuing notice of termination of employment

Most businesses’ employment contracts will contain a “Termination” clause, which will set out how much notice employer and employee must give each other to bring the employment relationship to an end. Many of these clauses will also require notice to be in writing.

Businesses may, therefore, feel fairly “safe” in ending an employee’s employment by simply writing to the employee and giving them the required period of notice. But it is not always that straightforward, as shown by a recent Court of Appeal (COA) case.

In that case, a 49 year old employee was told she was at risk of redundancy in April 2011. On 20 July 2011 she was due to turn 50, at which point she would have been entitled to a much more generous pension.

The employee’s contract entitled her to 12 weeks’ notice, and her employer was keen to make her redundant before she turned 50. They, therefore, wrote to her on 20 April 2011 to give her notice of termination, which was due to expire on 13 July 2011.

The employee went on holiday on 19 April 2011 and did not read the employer’s letter until her return on 27 April 2011. She argued that notice was not given until that date, and that her termination date was therefore 20 July 2011, which entitled her to the more generous pension.

So when was notice given? On 20 April 2011, as the employer suggested, or on 27 April 2011, as the employee suggested?

The COA concluded that notice was given on actual receipt, so the employer faced a hefty pension payment.

What does this mean for you or your business?

The above case may seem harsh, particularly as the employer sent the notice of termination by recorded delivery and ordinary post and an email to her husband’s email address, so there was little more they could do to communicate with the employee!

However, it serves as a useful reminder and warning to employers that generally, notice is given when it is actually received by the employee, and not on delivery or any deemed date of receipt, unless the employment contract specifically states otherwise.

You must ensure that notice has been given to and received by an employee, particularly if their termination date is significant for some reason, for example:

• a later termination date might give rise to a higher notice, redundancy or pension payment;

or

• a later termination date might allow an employee to acquire sufficient continuous service to bring an unfair dismissal claim.

What should you be doing now?

You should review your business’s employment contracts to see what they say about termination of employment and issuing notice.

If your employment contracts simply state that notice of termination must be given in writing, but they do not give any further detail about when notice is deemed to be given/received, then the principles in the above case will apply to you.

When sending notice of termination, you may find the following helpful:

• To ensure that notice is received, you may wish to send it by recorded delivery, so that it is signed for on receipt and you can check and keep a record that it has been received. 
  
  
• It is often sensible to use multiple methods to send notice of termination, especially where an employee may be "slippery", including recorded delivery, first class post (in case an employee is not at home when the recorded delivery arrives or refuses to sign for it!) and e-mail (as you can also request a "read" receipt).
  
  
• Where notice must be communicated quickly and by a specific date, it may be best to give it verbally and then follow up in writing.

If you are worried about any uncertainty, you may wish to update your employment contracts to include wording which specifies when notice is deemed to be received, for example, if sent by first class UK post, at 9.00 am on the second business day after posting.

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.