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Employment

Contractual notice – when does it take effect?

Background

Where an employee’s contract is not for a fixed term, notice is usually required in order to terminate their contract lawfully. Indeed, there is a statutory obligation on an employer and employee to give notice of termination. However, previously there has been an issue when notice provisions are not explicitly stated. When is the notice deemed to be served in the absence of an express term?

Last year, my colleague, Sarah Lee, discussed the case of Newcastle upon Tyne Hospital NHS Foundation Trust v Haywood when it reached the Court of Appeal (the COA). In summary of the case, the employee was to be entitled to an early retirement pension if her employment terminated on or after her 50th birthday. She was told that she was at risk of redundancy, but was on holiday when the letter containing notice to terminate was sent to her. This letter was sent by recorded delivery, and so was returned to the sorting office. Her father-in-law duly collected it and delivered it to her house on the 26th April. The employee only read the notice after returning home on the 27th April. If the notice took effect from a date prior to the 27th, she would not be entitled to her early retirement pension.

Since then, the case has reached the Supreme Court (the SC). Previously, the COA had determined that notice was given on actual receipt. This viewpoint has been followed by the SC, which confirmed the earlier judgment with a majority of 3 to 2. However, the SC has gone one step further. Lady Hale provided the lead judgment, and determined that the court had to imply a contractual term as to when written notice takes effect. The crux of the matter is that notice of termination of contracts will not be given until the employee has either read the notice, or had ample opportunity to do so. Seeing as the employee in this case had read the letter the day she returned from holiday, the 27th April was the earliest date that she could have reasonably read that notice.

The effect of this decision is to clarify that the common law practice of notice being given on the date that it was delivered to the address of the recipient is simply not relevant with regards to employment law. The approach follows that which has been taken by the EAT and puts the ball squarely in the employer’s court, to ensure that notice is communicated effectively and clearly to an employee.

What should you be doing now?

If your employment contracts do not provide clarification as to when notice is served, you need to be aware of the principles of this case. As stated in our last article on this subject:

  • Consider sending the notice by recorded delivery so that it is signed for on receipt. This will allow you to know when it is received, and when the employee will have had an opportunity to read it.
  • Use multiple methods to send notice of termination. This will ensure that the employee cannot avoid the notice. This will be of particular relevance where the employee is not around like in the above case where the employee was on holiday.
  • It may be useful to provide notice verbally before following this up with it in writing so that the employee is aware that it will be coming.
  • In addition, be careful to check that the communication has been sent to the correct location. This may seem obvious, but in the above case an email was sent to the employee’s husband and not her own personal email address. Had the email been sent directly to her at her email address, it may have been decided that she had a reasonable opportunity to read the notice at an earlier date. 

Looking forwards, you may wish to revisit the notice clauses within your employee contracts in order to clarify when notice is given, thus ensuring certainty for both parties as to when notice will take effect.  Also, check whether your employment contracts allow for service by email.

What does this mean for you or your business?

To reiterate what my colleague Sarah stated last year, if your employees’ contracts do not specifically state the point at which notice is received by the employee, you must ensure that you have effectively communicated the notice to them as it is only given when the employee has had reasonable opportunity to read it. This is especially relevant if a later termination date may allow the employee a specific benefit, such as in the above case, or if it will allow them to acquire sufficient continuous service to bring an unfair dismissal claim.

Recommended Reading

The full judgment of the Supreme Court case can be read HERE.

 

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

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