Bombshell

The Supreme Court has handed down its verdict that notice of termination takes effect neither when the termination letter is posted by the employer, nor when it is put through the employee’s front door, but when the employee reads it requires a change to every Contract of Employment says Chris from Expert HR Solutions.

It centred on the timing of her dismissal and whether the official notice fell before or after her 50th birthday, which had a major financial implication on future pension payments.

The ruling means that in the absence of an express clause in a contract outlining when notice is deemed to be given and take effect, it will be implied that notice will take effect from when it has been received and read by the employee, having first had a reasonable opportunity to do so.. The employee’s employment contract stated that she was entitled to a minimum 12-week notice period, but did not state how that notice should be communicated.

During the consultation when her post was placed at risk of redundancy, which she accepted, she requested that a final decision about this should not be made in her absence and explained when she would be on holiday, the Trust knew about and had approved the holiday.. The Trust sent a letter giving written notice of termination by recorded delivery to her home address, aware that she was away on holiday at the time.  A copy was also emailed to her husband’s email address.

As she was on holiday there was no one at home when the recorded delivery letter arrived so it could not be delivered.  It was collected by her father but not seen by the employee until she returned.

The Employer argued that notice was effectively communicated on 20 April, 12 weeks after the letter was sent, meaning her 12-week notice period expired before her 50th birthday.  The Employee maintained that notice of her termination was not effectively communicated until she read the letter on 27 April, meaning her termination date would be after her 50th birthday.

The High Court and the Court of Appeal upheld her case that the notice period only commenced after she had read the letter and the Supreme Court has now agreed.

In the absence of an express contractual provision, the court had to determine the implied contractual term as to when notice took effect. The Trust argued that a common law rule, derived from landlord and tenant cases, provided that notice was given when the letter was delivered to the recipient’s address.  The Employee relied on the approach of the Employment Appeal Tribunal (EAT) in employment cases that notice only took effect when it had actually been received by the employee and the employee had either read or had a reasonable opportunity to read it. The Supreme Court majority upheld the EAT approach was correct.

The ruling is important for employers and employees as the termination date can be decisive in determining an employee’s entitlement to a bonus or other contractual payment, insurance or employee benefits, or the statutory right to claim unfair dismissal and/or redundancy pay, and increased pension rights.

Chris says that the decision should prompt employers to review their contracts and, for those who have not already done so, to take advantage of the clear steer from the Supreme Court that careful drafting can provide greater certainty of when the notices they give take effect.

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