The Supreme Court has handed down its judgment in a case where the employee did not immediately read the letter of dismissal.
What is the case about?
Every employer will, at some point need to end someone’s employment – perhaps following a disciplinary or capability hearing. Dismissals are very common – and some managers are reluctant to give the employee the bad news face to face – preferring to send their decision in the post. That’s what happened in the case of Newcastle upon Tyne Hospitals NHS Foundation Trust v Haywood.
The case made it all the way to the Supreme Court and concerned the question of at what point does written notice of termination takes effect. Is it when the letter is received by the employee, or when the employee has had the opportunity to read the letter? Last year, the Court of Appeal confirmed that it was the latter: the employee had been away on holiday, the letter giving her notice of termination only took effect after her return, when she had an opportunity to read it.
The Supreme Court agreed. If an employee is dismissed on notice by post, and there is nothing in the contract to say when notice takes effect, then contractual notice only starts to run when the letter giving notice has come to the employee’s attention and they have either read it or had a reasonable opportunity to.
Why is this important?
For Mrs Haywood, the date notice took effect made a big difference to her pension entitlement. If her employment terminated on or after her 50th birthday, she was entitled to an enhanced early-retirement pension. She was on holiday when the dismissal letter was sent so notice only started to run from the day after she returned – meaning that termination took effect on the day of her 50th birthday.
For employers, the effect of the court’s decision is to imply a term into all employment contracts that notice to terminate will only run from the date the employee has read the dismissal letter (or has had a reasonable opportunity to do so).
What should employers do?
First, it is usually best to inform the employee of the dismissal in person, before confirming it in writing. If this is not possible, sending notice by recorded delivery will assist in demonstrating that it has been delivered – it would then be for the employee to show why they did not have a reasonable opportunity to read the letter. Finally, employers to consider including a clause in the contract to make it clear when notice is deemed to take effect (for example, two days after posting). This would override the implied term.
The case only concerned the timing of notice for the purpose of terminating the contract. Different considerations may apply to identifying the ‘effective date of termination’ for statutory purposes, for example, to calculate the qualifying period for claiming unfair dismissal. It is likely, however, that the Supreme Court’s decision in this case will be cited in future cases where the ‘effective date of termination’ is disputed.
Newcastle upon Tyne Hospitals NHS Foundation Trust v Haywood [2018] UCSC 22