Defective employment contract causes employer loss: The Court of Appeal ruling on when termination takes effect

Defective employment contract causes employer loss: The Court of Appeal ruling on when termination takes effect

The Court of Appeal has held that where a contract of employment lacks a provision for when notice of termination takes effect, it is effective from when the employee personally takes delivery of the letter containing notice. Deemed service rules do not apply, nor does delivery if they are not present at the address.

In Newcastle upon Tyne NHS Foundation Trust v Haywood [2017] EWCA Civ 153 the employee, Ms Haywood, was notified she was at risk of redundancy following a merger of NHS bodies. At a consultation meeting, she notified the Trust’s representatives of her imminent annual leave.

During Ms Haywood’s leave period and whilst she was abroad on holiday, the Trust sent 3 letters confirming the redundancy, notice period, and her effective date of termination at the end of the notice period. The effective date of termination was crucial, as following her contractual entitlement to 12 weeks’ notice, it fell within days of her 50th birthday – after which, she would be entitled to a higher pension if she was still deemed to be employed.

  1. Letter 1 was sent to her address by recorded delivery, a slip was left, and the letter was later collected from the sorting office by her father-in-law.
  2. Letter 2 was sent by standard mail.
  3. Letter 3 was sent to Ms Haywood’s husband’s email address.

The Court of Appeal Judges held by a majority that delivery occurred when Ms Haywood opened and read the letter herself, after she returned from her holiday abroad, meaning her effective date of termination was on her 50th birthday. She was therefore entitled to the higher pension. The way in which the employment was extended could be important in other cases because it could cause employees to accrue entitlements, such as further continuous service and unfair dismissal rights.

The Judges all arrived at the decision in different ways and it is not known whether the Trust will appeal the case in the Supreme Court. Given other recent judgments on notices we would certainly welcome clear and consistent authorities on the effect of a defective notice. In the meantime, we recommend that employers review notice provisions in their contracts of employment, to reduce the risk of a notice being defective.

If you would like further information or advice on contractual clauses relating to termination of employment, please contact James Simpson or Jasmin Dhillon on 01494 478 671 or jfs@blasermills.co.uk & jad@blasermills.co.uk