Notice period didn’t start to run until termination letter read by employee

The Supreme Court has decided that when written notice is given to end a contract of employment, there is an implied term that the notice period does not start to run until the employee has a reasonable opportunity to read the notice. That is assuming there is no express provision in the contract stating that the notice period starts at an earlier point – for example when the notice is delivered to the employee’s home address.

Normally it is not vitally important to work out exactly when employment ends for contractual purposes.  But in this case it was of considerable importance, because the claimant was a NHS employee who stood to receive a significantly more generous early retirement pension if she had reached the age of 50 by the time her employment was terminated on grounds of redundancy.

By the time it was ready to serve the redundancy notice, the NHS Trust knew that Ms Haywood would be away on holiday, returning on 27 April 2011. This was a crucial date, since only notice given before that date would expire before her 50^th birthday. The notice of termination was sent by recorded delivery, collected by her father-in-law from the post office, and left at her home address on 26 April. However Ms Haywood did not return to the house until the early hours of 27 April, and read the letter a few hours later.

The Supreme Court (by a 3:2 majority) has decided to take its lead from earlier decisions of the Employment Appeal Tribunal.  In the view of the majority, these decisions had established the general principle that actual communication of a decision to dismiss was essential. Failing that the employee must at least have had a “reasonable opportunity of learning of it”. It followed that the notice period did not start to run until 27 April, and Ms Haywood was entitled to her full early retirement pension.

The Supreme Court made it clear that this situation could have been avoided if the employment contract had included a provision spelling out exactly how notices under the contract were to be given and when they took effect. Employment contracts do not commonly contain such provisions, though employers will need to reconsider their practice in the light of this decision.

One final point: at least since the 2010 decision of the Supreme Court in Gisda Cyf, it has been clear that the employee must normally know about the decision to dismiss before the three month limitation period for unfair dismissal claims starts to run. The majority of the Supreme Court has now decided that the same rules should be applied when working out the start of any contractual notice period, assuming there is no express provision to the contrary in the contract of employment. So it still makes sense to continue the traditional practice of handing any written notice of dismissal to the employee personally and explaining what it means face to face, where this is possible. That way everyone involved knows exactly where they stand.