A frequently asked question following termination is when can we stop paying from; particularly where an employment contract is silent on when notice is deemed to be given. The question of when notice of termination takes effect was recently revisited in the Supreme Court case of Newcastle Upon Tyne NHS Foundation Trust v Haywood.
There are three possible answers that employers consider when debating this query;
1. When the termination letter would have been delivered in the ordinary course of post;
2. When the letter was actually delivered to the relevant address; or
3. When the letter comes to the attention of the employee and s/he has read it or had a reasonable opportunity to do so.
The Supreme Court upheld the Court of Appeal’s earlier decision by a majority in favour of option 3; When the outcome or termination letter is actually received by the employee and s/he has read it, or had a reasonable opportunity to read it is when termination actually takes effect.
To illustrate this in the present case going back to April 2011, Ms Haywood was at risk of redundancy. She was contractually entitled to be given 12 weeks’ notice, although her contract of employment was silent about how notice was deemed given. The significance of this was that Ms Haywood turned 50 on 20 July 2011 and therefore, redundancy taking effect after her 50th birthday, would have entitled her to a more generous pension than being made redundant before. On 19 April 2011, Ms Haywood went on holiday.
The next day, her employer sent notice of termination by recorded delivery and ordinary post. This letter was read on her return from holiday, namely 27 April 2011. If delivery of the letter was deemed effective before 27 April when it would have been delivered or was actually delivered Ms Haywood would have received a much lower pension. However, if her termination by way of redundancy was deemed effective on the day she returned from holiday and read the confirmation letter, she would have received the more substantial pension.
The majority of the Supreme Court held there was no good reason to disturb the long-standing line of caselaw from the Employment Appeal Tribunal. The notice was only deemed effective when it was read by the employee or when s/he had a reasonable opportunity to read it.
Therefore, it was not deemed effective until 27 April, and she was entitled to the higher pension.
This case serves a useful reminder as many employers hold a disciplinary meeting, adjourn and do not send the outcome letter confirming a dismissal decision until a few days later, sometimes even longer.
This can inevitable delay when notice takes effect and how long an employee should be paid, in lieu or otherwise. Whilst it is certainly best practice to adjourn any disciplinary hearing before making a decision to properly consider the information and evidence; one option to avoid ambiguity regarding the effective date of termination, is to ensure that the outcome is communicated verbally following the adjournment.
A comprehensive letter confirming the decision and reasoning must still be sent, however this can refer to the fact that the decision was made and confirmed on the date of the hearing thus cementing the effective date of termination as when s/he is aware. Ensure the outcome letter is sent promptly after the disciplinary hearing and payments are made up to that date including accrued but unused holiday entitlement.
If you have any related enquiries you can contact one of the Backhouse Jones team on 01254828300 and please remember this article does not constitute legal advice.