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When does notice of termination take effect?

The Supreme Court’s decision last month in Newcastle upon Tyne Hospitals NHS Foundation Trust v Haywood was not just academically interesting, but also serves as another useful reminder to all HR practitioners of the importance of ensuring that any notice to terminate employment has been properly communicated to the employee in a clear and timely manner.

The Supreme Court’s decision last month in Newcastle upon Tyne Hospitals NHS Foundation Trust v Haywood was not just academically interesting, but also serves as another useful reminder to all HR practitioners of the importance of ensuring that any notice to terminate employment has been properly communicated to the employee in a clear and timely manner. Contributor Leon Deakin, Partner and Head of Employment – Coffin Mew

The facts
In April 2011 Ms Haywood was informed she was at risk of redundancy. If she was made redundant after her 50th birthday the pension she would receive was significantly greater than that which she would receive if her employment ended before. The contract of employment entitled her to receive 12 weeks’ notice but importantly was silent on how notice was deemed to be given.

On 19 April 2011 Ms Haywood went on a foreign holiday having told the Trust she would be away until 3 May 2011 at a prior consultation meeting. On the 20 April the employer sent her notice of termination by recorded delivery and ordinary post. Her father-in-law picked the letter up for her from the Post Office on the 26 April and left it at her home. Ms Haywood did not read the letter until her return on 27 April.

As she turned 50 on 20 July 2011 the timing of when the notice took effect became incredibly important. If notice was deemed to have been effectively given before 27 April she would receive a lower pension amount. However, if it was deemed effective only on the day she returned home and read it she would qualify for the more generous pension.

After the Trust maintained the earlier date was effective Ms Haywood unsurprisingly brought High Court proceedings seeking the more generous pension treatment.

The decision
The High Court agreed with Ms Haywood’s claim on the basis her contract could be construed in a way that notice had to have been personally received and read before it could start to run.

The Trust appealed to the Court of Appeal who again found in favour of Ms Haywood. However, they disagreed with the High Court’s reasoning stating that in the absence of any specific contractual provision the contractual notice took effect only when the employee personally took delivery of the letter containing the notice.

The Trust appealed again this time to the Supreme Court. The Supreme Court once more dismissed the appeal and Lady Hale, who gave the leading judgement, made it clear that in the absence of an express contractual provision the court had to determine the implied contractual term as to when written notice takes effect. In her view it was apparent that receipt of the notice is always required, and arguably by a person authorised to receive it. In addition, relevant case law suggested to her that the notice must have been communicated to or come to the attention of the addressee.

Looking back over past cases, Lady Hale also noted that they consistently held, albeit in different contexts, that written notice does not take effect until the employee has read it or had a reasonable opportunity of doing so. However, none of these cases had specifically dealt with the common law contractual position. Instead they covered topics such as how to calculate the effective date of termination for the purposes of unfair dismissal under the Employment Rights Act 1996. A related but different point.

In addition, she felt this approach would be consistent with the previous Supreme Court ruling in the well-known case of Geys v Societe Generale. That case found that it was crucial for both employer and employee to know and be clear on whether the employee has a job or not. It must also be clear on what terms they have been dismissed.

Specifically, was it a summary dismissal, or dismissal with immediate effect and payment in lieu of notice? Even if, as was the case for Ms Haywood, a dismissal on notice Lady Hale felt it needed to be clear.

Applying this reasoning Ms Haywood only read the letter on 27 April when it came to her attention and, therefore, the notice did not take effect until then.

The implications
There are several important points for practitioners and legal advisors. First it is always important to double-check the contents of the relevant contract of employment before proceeding. What, if anything, does it say about the requirements for giving notice and the timing involved?

Any specific requirements should be closely followed to avoid a Geys or Haywood scenario. If, as is very often the case, the contract outlines how much notice must be given but is completely silent on how it must be given (beyond perhaps saying it should be in writing), it is best to be cautious. I.e. ensure the employee is clearly informed of the decision, the relevant notice details and information (such as final date of employment and associated details).

In addition, this information should ideally be communicated in a way that would be difficult to contest receipt of, which could be verbally with a written confirmation sent direct to the employee in a manner by which the employer is confident they will receive promptly. For example, by email (with a read receipt) plus also by recorded delivery, both to addresses the employer has ideally verified as being in use. If the circumstances allow, it would be even better if the verbal outcome could be accompanied by hand delivery of the confirmation letter.

In many cases this approach may not be necessary, as little may turn on whether notice is deemed to have been given a few days apart. However, it could be a good habit to get into as it becomes important if the timing of notice could result in significantly different outcomes.

The most obvious risk factors to bear in mind when making that assessment, beyond the niche pension point in Haywood, include accrual of statutory rights and protections, such as two years’ service for unfair dismissal, as well as the correct calculation of redundancy entitlement. In addition, as with the Geys case, it is entirely possible certain staff bonus entitlements could be significantly impacted depending on the date notice is deemed given.

Finally, there is also the possibility of post-termination restrictions falling away if a termination is effected inconsistently with any notice clause and therefore gives rise to a breach of contract claim. Indeed, although technically a court could find different dates that notice was deemed to have been given for contractual and statutory purposes, by being clear and ensuring the details are properly communicated you minimise the risks arising so far as possible.

Of course, there can often be circumstances where it is simply not reasonable or even physically possible to inform the employee of the decision verbally first, nor place a copy of a letter in their hand. Indeed, you may even know or suspect they are either unable to pick up a message or perhaps even deliberately ignoring them.

For example, the employee may be AWOL or, as in the Haywood case, be away from the office at the time the decision is taken. In those circumstances, it is even more important to try and ensure every reasonable effort is taken to ensure they actually receive and read the written communication or, in the words of Lady Hale, have at least had a reasonable opportunity to do so.

Keeping up to date records and, when in any doubt, checking the correct address and best times and methods to communicate should help. As an extension, it seems clear from the judgement that seeking to pass on a written message by a relative, next of kin or friend who is not expressly authorised to receive it is a risky approach. Indeed, the Supreme Court unanimously agreed that Ms Haywood’s father-in-law could not be seen as acting as her agent simply by picking up a letter for her having seen the post office delivery slip.

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