Newcastle Upon Tyne NHS Foundation Trust v Haywood
Where an employment contract is silent on when notice is deemed to be given, when does notice of termination take effect?
For £1m! Is it:
A. when the letter would have been delivered in the ordinary course of post;
B. when it was in fact delivered to that address; or
C. when it comes to the attention of the employee and s/he has read it (or had a reasonable opportunity to do so)
WHAT IS THE ANSWER??
C. - It is when it is actually received by the employee and s/he has read it (or had a reasonable opportunity to read it), held the Supreme Court, upholding the Court of Appeal's decision.
In April 2011, Ms Haywood was told she was at risk of redundancy. She turned 50 on 20 July 2011. This date is important as 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.
On 19 April 2011, Ms Haywood went on holiday. On 20 April, her employer sent notice of termination by recorded delivery and ordinary post. She read it on her return from holiday, on 27 April.
If delivery was deemed effective before 27 April, she would have received the much lower pension. But if it was deemed effective on the day she returned from holiday and read it, she would have received the much more generous pension.
The majority of the Supreme Court held there was no good reason to affect the long-standing line of caselaw from the EAT.
The notice was only deemed effective when it was read by the employee (or s/he had a reasonable opportunity to read it). Thus, it was not deemed effective until 27 April, and she was entitled to the higher pension.
The Supreme Court judgment effectively identified a standardised implied term when giving written notice of dismissal (i.e., a term implied into all contracts unless there is express provision to the contrary):
There is an implied term that written notice runs from the date it is read, or if earlier, the date one had a reasonable opportunity of reading it
Implications for employers
- The case concerned a common law implied term. This is an area where express terms are king and it is clear that this particular implied term cannot overwrite express terms as to notice. Therefore, for clarity, it may now become more common for standard-form employment contracts to be amended to provide certainty for employers – that is, to make it clear that notice runs from a particular date after a written notice is sent, with rebuttable or irrebuttable presumptions (or deeming provisions) as to delivery.
- Regarding existing employment contracts, employers may face difficulties where an employee cannot be contacted: what of employees who are hospitalised, or have gone AWOL or are on sabbatical, or are signed off work with a requirement that the employer does not contact them? These issues may well need to be clarified in future cases. It also begs the question when an employee has had a reasonable opportunity to read a letter—what of the employee who is unable to summon up the courage to read a letter for health reasons? What of the interplay between this implied term and disability discrimination?
- The decision may lead to a change in HR practice when giving notice. It is common for dismissal to be confirmed by letter. Additionally, people are usually given the exact notice as required by the contract and not ‘more notice’. However, this decision may lead to a shift in culture: if an employer wants greater certainty there is nothing to stop it telling the employee face to face and handing over a letter at the same time (if the contract requires written notice) and one can give more notice than required setting out a clear end date. However, in large-scale dismissals, how in practice will employers achieve certainty where there is no express term overriding the standardised implied term?
- There was a recognition that the developments in technology mean that electronic communication (with the greater proof offered by read receipts, server receipts and so on) may soon replace written letters and the need for deeming provisions will be reduced. Although the employer in this case sent a copy of the written notice by email, in fact, the Supreme Court did not consider the consequences of this at all (and were not invited to do so). Could we soon see dismissal by WhatsApp and Twitter?!
- The decision may also affect statutory rights. The majority of the Supreme Court were persuaded in part by cases decided in the statutory employment protection context. Of course, the Employment Rights Act 1996, in s.86, sets out statutory contractual terms as to minimum notice. One can foresee a future case where an employee who is given two weeks’ written notice, which is said to expire before getting unfair dismissal rights, argues that in fact the notice should not be taken as starting to run until a later date when he/she read the notice of dismissal (and had a reasonable opportunity of reading it) and thereby extend the effective date of termination despite clear wording in the written notice of dismissal that the contract ends before that date.
From the above points, it may be worth starting to put Notice related clauses in contracts for clarity OR of course verbally inform staff of the decisions to dismiss at the same time you hand them the letter to ensure you know the date that they were informed and given notice.