Background
One of the cornerstones of the employment relationship is that in the vast majority of cases an employer must give an employee notice to terminate their employment.
This obligation is a statutory one, as the Employment Rights Act requires employers to give a minimum period of notice to employees with more than one month’s service. It is also generally a contractual one, with the applicable notice period being framed as part of the employee’s terms and conditions.
While the amount of notice to be given is generally a straightforward concept, the mechanics of how and when notice is given can be more complex. For example, it is generally accepted that the day on which notice is given will not count towards the notice period.
An even more difficult aspect of notice relates to when it is received, as the notice period will not start until the person has received it. This tends to be less problematic when notice is given orally, but can be an issue when it is sent to the employee in writing. Such was the experience of the employer in this case.
The facts
Mrs Haywood worked for the NHS for over 30 years. On 13 April 2011, she was told that a restructure was to take place which might result in her being in a redundancy situation. The Trust eventually proceeded to give her notice of termination of employment.
The date of termination was pivotal, as a termination either on or after her 50th birthday would allow Mrs Haywood to access an early retirement pension of around £400,000.
Given her length of service, Mrs Haywood was entitled to 12 weeks’ notice. In order to avoid the significant pension liability, the Trust was required to give notice before 27 April to ensure that Mrs Haywood’s employment ended before she turned 50.
Mrs Haywood was on holiday abroad from 18 April to 27 April. The Trust sent a letter of termination to Mrs Haywood by recorded delivery on 20 April, and also sent a copy by email to her husband. As she was not able to sign for receipt of the letter, it was returned to the post office to be collected there.
Mrs Haywood’s father collected the letter on her behalf on 26 April and Mrs Haywood opened it on 27 April. Mr Haywood opened the email from the Trust on 27 April. Mrs Haywood thus claimed that her notice period would expire at such a time as to entitle her to the early retirement pension.
The Trust’s argument in the High Court was that the notice period began to run on 26 April, as this was the date of delivery, being the day that the letter was collected by Mrs Haywood’s father. Mrs Haywood’s contention was that notice began to run on 27 April, as this was the date on which she read the letter.
Both the High Court and Court of Appeal preferred Mrs Haywood’s argument, so the Trust appealed to the Supreme Court.
The Supreme Court’s decision
The Supreme Court (SC) dismissed the appeal, finding that a notice period can begin only when the employee has received the written notice and has had a reasonable opportunity to consider it.
The SC’s decision has effectively created a new implied term into all contracts of employment, meaning that the preceding paragraph will apply unless the contract expressly states otherwise.
Of course, ‘reasonable’ is one of the most commonly used terms in employment law and what is reasonable will depend on the facts of each case. For example, an employee purposely choosing not to open a letter if delaying doing so would result in a windfall (similar to Mrs Haywood’s) might be seen to have had a reasonable opportunity to read the letter despite not doing so.
What does this mean?
The main lesson to be learned here is that, where possible, employers should not wait until the last possible moment before issuing notice of termination.
Clearly in this case the main consequences were the financial implications of pension rights on redundancy, but the warning can also be applied to circumstances in which the employer is trying to dismiss the employee before they reach two years’ service and gain the right to claim unfair dismissal.
The case also highlights that giving written notice can be problematic as there is often reliance on the postal service. While we wouldn’t seek to cast any aspersions on the Royal Mail, it is possible for letters to be delayed or even go missing, which could result in consequences similar to the above.
On that basis, especially if time is of the essence, employers may wish to consider whether notice should be given orally and followed up in writing, as doing so leaves less room for doubt. Of course, prudence would suggest that having a witness to such a conversation would be safer still, to reduce the risk of the employee being able to claim that the dismissal conversation didn’t take place.
As an additional security measure, it is possible to stipulate in a contract of employment how notice can be given and when it will be deemed to have been received. For example, the contract could state that the dismissal letter will be deemed to have been received within 24 hours of being sent by recorded delivery. Framing the contract as such could again remove some doubt from the situation.
In any event, employers should keep a note of any significant dates when dismissal is being considered, to ensure that any decisions can be implemented in plenty of time. Taking appropriate steps in this regard could significantly reduce the risk and cost of the dismissal.
If you have any questions on any of the issues raised in the above article please contact Seanpaul McCahill.