UK: Supreme Court Rules On When Notice Takes Effect

The Supreme Court has ruled that unless an employment contract provides otherwise notice to terminate employment takes effect from when the employee opens and reads the notice or has had reasonable opportunity to do so.

Importance of when notice takes effect

In Haywood the Supreme Court's decision on when notice took effect would determine whether or not Mrs Haywood's employment terminated before her 50th birthday. If it did not she was entitled to a significantly higher pension.

It has previously been established by the Supreme Court (Gisda Cyf v Barrett) that for the purposes of an unfair dismissal claim a letter relating to the termination of employment takes effect when the employee opens and reads the letter (or has had a reasonably opportunity to do so). In Haywood, the Trust argued that previous case law had clearly established that the position was different in a contractual context.

The Supreme Court's decision

A majority of the Supreme Court did not agree with the Trust's contention. The Court held that there was no clear and universal principle under common law that service of notice occurs when notice is delivered to the recipient's address.

In the absence of such a common law principle the Supreme Court's judgment found that the same principles apply to statutory and contractual matters. Lady Hale was clear that 'it makes obvious sense for the same rule to apply to all notices'.

Key practical points

Unless an employment contract provides otherwise a term will be implied into it that notice of termination takes effect from when the employee opens and reads the notice or has had reasonable opportunity to do so.

The Supreme Court has given a clear steer that careful drafting can provide greater certainty on when notice of termination takes effect.

What now?

As highlighted at our recent annual employment seminar employers should review their employment contracts to ensure that they include provisions setting out when notice is deemed to be received and take effect.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.