Notice of termination takes effect when the employee reads it if no express term in the contract of employment

Newcastle upon Tyne Hospitals NHS Foundation Trust v Haywood [2018] UKSC 22

Why care?

Many employment contracts expressly set out how notice of termination by an employer is considered to have been received by the employee. Disputes arise where contracts are silent. In this case the Supreme Court had to consider when termination on notice, delivered by post, took effect. Was posting the letter (the 'postal rule') enough, did it have to arrive at the employee's home ('receipt') or did it have to be actually read by the employee ('communicated')?

The case

The employee (Ms Haywood) was informed by her employer (the Trust) that she was at risk of redundancy about 13 weeks before she turned 50 on 20 July 2011. Redundancy after her 50th birthday would have entitled her to a considerably more generous pension than redundancy beforehand. Ms Haywood was contractually entitled to be given 12 weeks’ notice, but her contract was silent about how notice was deemed given. At a consultation meeting, Ms Haywood informed her employer that she was on holiday from 19 April until 3 May 2011. She then went abroad from 19 to 27 April. On 20 April, the Trust sent three letters confirming the redundancy and terminating Ms Haywood's employment with 12 weeks' notice, to terminate on 15 July 2011.

One letter was sent by recorded delivery and was collected by a family member from the sorting office on 26 April and left at Ms Haywood's home on the same day. Ms Haywood read this letter on 27 April. Another letter was sent by standard mail to her house and a third was sent by email to Ms Haywood's husband's email address. He read it on 27 April too.

If the letter had been served by 26 April 2011 then the notice period would have expired before Ms Haywood's 50th birthday on 20 July 2011 so that she would only have been entitled to a lower pension than if it had expired on or after that date. The question for the courts was whether time started by (a) when the letter was posted, (b) its delivery to Ms Haywood's home, or (c) her actual receipt of it.

The High Court and Court of Appeal found that where there was no express term, notice was only effective once Ms Haywood had actually read the letter of dismissal. This had the effect that Ms Haywood had been employed up to and including 20 July 2011 (her 50th birthday) and she was entitled to the higher pension.

The Trust then appealed to the Supreme Court which also dismissed the appeal by a majority. It held that when dealing with written notice sent by post, and in the absence of an express contractual term specifying when a notice of termination is effective, the notice starts to run when the letter comes to the attention of the employee and they have either read it or had a reasonable opportunity of doing so. The court rejected the Trust's argument that notice would start to run either when the letter would have been delivered by post or when it was actually delivered to Ms Haywood's address. Instead it agreed with the EAT's approach in previous cases.

What to take away

This case is relevant for contracts of employment which are silent on when notice, once given, takes effect. In those situations, and following this case, there is an implied term that a notice period will run from the date that the employee reads the notice, or has had a reasonable opportunity to do so.

Commonly, notice is often given orally to an employee at the end of a meeting, at the same time as being handed notice of termination in writing. However, if, as here, an employee is not physically present, organisations should consider whether they should amend their contracts of employment to expressly include when notice is effective, for example where a letter is sent to an employee. If speed of communication is key, then other forms of method of notice could be expressly included, such as email.

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