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Supreme Court implies new term in all contracts of employment

If an employee is dismissed on written notice posted to their home address, does the notice period begin to run from the date the letter was delivered or from when the employee actually reads it?

In a landmark judgement, the Supreme Court in Newcastle upon Tyne Hospital NHS Foundation Trust v Haywood held that a term will be implied into all contracts of employment that notice will only start to run from the date the employee has received the letter and had a reasonable opportunity to read it, if the date is different.

1. Implications for employers

Employers should make sure that their contracts of employment set out how notice can be served, and when it will be considered to have been received. Contracts should clearly state when written notice will be been deemed to have been received (e.g. by first class post, 48 hours after the time of service).

The decision may affect the interpretation of other contracts where there are no statutory or standard terms. It may lead to arguments that notice of termination of contracts only occurs when the recipient has had a reasonable opportunity to read the notice.

2. Background

Mrs Haywood worked for the NHS for over 30 years. She was informed that she might be made redundant following the merger of two NHS bodies. Both parties knew that if her employment terminated before her 50th birthday, she would not be entitled to receive a reduced early retirement pension, worth approximately £400,000.

Mrs Haywood was entitled to 12 weeks’ notice. The crucial date was 27 April 2011. Notice given on or after that would expire on or after her 50th birthday and would trigger her right to receive an early pension.

Mrs Haywood had pre-booked an overseas holiday from 18 April to 27 April. The Trust issued written notice to terminate her employment on 20 April, which it sent by recorded delivery to her home and by email to her husband’s email address. Mrs Haywood’s father collected the letter from the Post Office on 26 April and she opened it when she returned home the following day. Her husband read the email notice on 27 April.

The Trust argued that notice was effective from the date of delivery (26 April). Mrs Haywood argued that it was effective from the date she actually read it (the following day). The High Court and Court of Appeal ruled in favour of Mrs Haywood, and the Trust appealed to the Supreme Court.

3. Supreme Court decision

The Supreme Court decided that notice could only run from the date an employee receives written notice of their dismissal and has had a reasonable opportunity to consider it. This interpretation will now be implied into every contract of employment, unless the contract between the parties expressly provides otherwise.

What is reasonable will depend on the circumstances. If Mrs Haywood had returned from her holiday a day earlier, but had chosen to avoid opening her letter of dismissal to improve her financial position, her claim would have failed. Similarly, if Mrs Haywood had been on leave but remained at home, she would have been deemed to have had a reasonable opportunity to consider the letter. An employee who effectively buries their head in the sand to avoid facing an unpleasant situation will not be acting reasonably.

If the Trust had wanted to make sure that Mrs Haywood received notice of dismissal before her valuable pension rights crystallised it should have taken further steps to inform her at an earlier stage – either in writing before she went on holiday or over the telephone when she was away.

Autumn 2018

Key Contact

Jo Moseley