When Does Notice of Termination Take Effect?

June 1, 2018

When Does Notice of Termination Take Effect?

Exactly when notice of termination takes effect can impact on an employee's entitlement to certain benefits or employment rights. In the absence of an express term in the employee's contract, if they are dismissed in writing and the letter is posted to their home address, when does the notice period commence? Does it run from when the letter would have been delivered in the ordinary course of post, from when it was in fact delivered to that address, or from when the letter came to the attention of the employee and they either read it or had a reasonable opportunity of doing so? That was the question before the Supreme Court in Newcastle upon Tyne NHS Foundation Trust v Haywood.

Sandi Haywood had worked for the NHS for more than 30 years. She held a senior role as associate director of business development for Newcastle and North Tyneside Primary Care Trusts. In April 2011, following a merger of the two bodies, she was informed that she was at risk of redundancy. On 13 April, at a meeting to discuss her situation, it was accepted that she was entitled to 12 weeks' notice and she was told that no final decision on redundancy had yet been taken. She said that she would be entitled to an NHS pension of about £200,000 if she were made redundant after her 50th birthday on 20 July 2011 and reminded her employer that she was about to go on annual leave, including a trip to Egypt.

On 20 April 2011, while Ms Haywood was away on holiday, her employer sent written notice to her home address that her contract was terminated with 12 weeks' notice, thus purporting to end her employment five days before her 50th birthday. She subsequently opened the letter on her return at 8:30am on 27 April.

The date on which the 12-week notice period started to run was highly material. Ms Haywood argued that the effective date of termination was 12 weeks after she had actually read the communication. If, on the other hand, the notice period commenced on or before 26 April, her pension entitlement would be significantly reduced.

The High Court ruled in favour of Ms Haywood and the Trust appealed.

In a majority ruling, the Court of Appeal found that in the absence of an express provision stating when a notice of termination is effective, notice is served when it is actually read by the recipient. The Court was confident that Ms Haywood had not unreasonably avoided receipt of the communication and the Trust had been aware that she was absent from home. On that basis, her notice period expired after her 50th birthday and she was thus entitled to an enhanced pension payment.

In dismissing the Trust's appeal against that decision, the Supreme Court agreed, by a majority of 3 to 2, that Ms Hayward’s notice period commenced when she read the letter or had a reasonable opportunity to do so. That approach had been consistently taken by the Employment Appeal Tribunal in the past and there was no reason to suppose that it had caused any real difficulties in practice. In order to avoid such difficulties, employers can easily make express provision in staff contracts as to how notices of termination are to be given. Alternatively, they can take steps to ensure that such notices are received in sufficient time to allow the employment to terminate on a specified day.