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Contractual notice only starts when the employee knows they are being dismissed

View profile for Susan Mayall
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When is notice for dismissal effective? Is it when the letter is received, signed for, or only effective upon when the employee reads the letter and is informed of their dismissal?

In 2017 the Court of Appeal held that notice of termination begins to run on the date of personal receipt by the employee being dismissed. The employer appealed, and the position has now been clarified by the Supreme Court in Newcastle upon Tyne Hospitals NHS Foundation Trust (Appellant) v Haywood (Respondent) [2018] UKSC 22

The Facts                                                                                                    

Mrs Haywood was employed by the Newcastle NHS Trust as Associate Director of Business Development. Her position had been identified as one of those at risk of redundancy and subsequently, she had attended consultation meetings. Mrs Haywood was on annual leave between 19 April until 3 May, and was on holiday in Egypt for the first week of this period.

In her absence, the Trust decided to serve her notice of dismissal by reason of redundancy. Her contract of employment provided for termination on a minimum period of 12 weeks but remained silent how such notice should be given. 

  • On 20 April a letter was sent to Mrs Hayward’s home address by way of recorded delivery.
  • On 21 April a delivery slip was left indicating that the letter had been taken to the local sorting office.
  • On 26 April the letter was collected by her father-in-law.
  • On 27 April, Mrs Hayward returned from holiday and read the letter giving her notice of dismissal.

In this instance, the date upon which the 12 week notice period started to run was highly significant. If it commenced on 27 April it would expire on 20 July, the date of Mrs Heywood’s 50th birthday, and she would be entitled to enhanced pension.

Outcome

The Supreme court upheld the judgment by the Court of Appeal and held that in the absence of an express contractual provision specifying when notice would be effective, the notice of dismissal was deemed to been given when Mrs Haywood had returned home and read the letter. Therefore, Mrs Haywood was 50 at the date of termination and was entitled to the higher pension.

What does this mean for your business?

This case demonstrates that it is imperative to get the date of termination right. This is particularly important when a small difference in termination date can have significant financial consequences for an organisation. Here are some steps you can take:

  • Assess when notice of termination is effective from; the costs of continuing to employ any senior or highly remunerated employee make this a worthwhile exercise;
  • always inform an employee of dismissal and then confirm in writing afterwards

If you require assistance with any of the discussed topics or have another question around employment and labour laws, you can contact Susan Mayall on 0161 684 6948.

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers LLP or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.