Supreme Court clarifies when notice of termination is effective (Newcastle upon Tyne Hospitals NHS Foundation Trust v Haywood [2018] UKSC 22)

The Supreme Court handed down its long-awaited landmark decision in April this year, in the appeal of Newcastle upon Tyne Hospitals NHS Foundation Trust v Haywood [2018] UKSC 22, ruling that notice of termination takes effect neither when the termination letter is posted by the employer, nor when it is put through the employee’s front door – but when the employee actually reads it.

The Supreme Court found in favour of Sandi Haywood, an NHS worker whose managers sent her notification that her role was redundant while she was on holiday. It centred on the timing of her dismissal and whether the official notice fell before or after her 50th birthday.

The Supreme Court by a majority of three to two (Lord Lloyd-Jones and Lord Briggs dissenting) dismissed the Trust’’s appeal. Lady Hale, with whom Lord Wilson and Lady Black agreed, analysing the common law decisions reached in civil courts as well as the line of employment law cases decided since 1980, gave the main judgment and Lady Black added a further analysis of the case-law.

While the case dealt with an employment issue, the case was initially heard in the High Court as a breach of contract claim. Lady Hale, current President of the Supreme Court,  expressed surprise in her judgement that, given the number of people that this problem could potentially affect, the higher courts had not seen such a case before now.

The factual background of Newcastle upon Tyne Hospitals NHS Foundation Trust v Haywood

Mrs Haywood (the Respondent), was dismissed by reason of redundancy by her employer, the NHS Trust (the Appellant). Her contract of employment provided for termination of a minimum period of notice of 12 weeks but did not explicitly state how such notice should be given or when it should take effect.

On 20 April 2011, the Appellant sent a letter giving written notice of termination by recorded delivery to the Respondent’s home address. The Appellant was aware that she was away on holiday. The letter was collected from the local sorting office by the Respondent’s father-in-law on 26 April 2011 and left by him in her house that day. She returned from holiday abroad on 27 April 2011 and read the letter.

On the unusual facts of this case, the date on which the 12 week notice period started to run was highly material. If it commenced on 27 April 2011, it expired on 20 July 2011, the date of the Respondent’s 50th birthday, and she would be entitled to claim a non-actuarially reduced early retirement pension.

The decision of the Supreme Court

In the absence of an express contractual provision, the court had to determine what the implied contractual term should be in terms of when notice of termination of employment should take effect.

The Appellant argued that there was a common law rule, principally derived from landlord and tenant cases, which provided that notice was given when the letter was delivered to its address. The Respondent relied on the approach of the Employment Appeal Tribunal (EAT) in employment cases to support her case that notice only took effect when it had actually been received by the employee and the employee had either read or had a reasonable opportunity of reading it.

Having reviewed the cases relied on by the parties, the majority of the Supreme Court held that the approach which had been taken by the EAT was correct because:

  • The common law rule in non-employment cases was not as clear and universal as the Appellant suggested and could not necessarily be relied on in this case.
  • The EAT was an expert tribunal familiar with employment practices. Its previous decisions had favoured the approach that, due to the personal nature of the employment contract, and in the absence of an express provision in that contract, the employee must personally see the letter of dismissal.
  • An employer could either make express alternative provision in the contract or ensure notice of termination was received in sufficient time to allow the employment to terminate on a specified day. In addition in this case, the Appellant was fully aware that the Respondent was on holiday and would not be able to open the letter until she returned.
  • Lady Black reviewed the common law cases in further detail to support the finding that that these cases did not have the effect contended for by the Appellant that delivery to the recipient’s agent, who might be a household servant, professional agent or family member (in this case the Respondent’s father in law), amounted to receiving notice on her behalf.
  • Lord Briggs, dissenting, found that the common law cases had long established a rule that embedded an implied term into contracts of employment determinable on notice. Such contracts were only a sub-species of relationship contracts. The rule for relationship contracts was that written notice of termination was given when the document containing it was duly delivered by hand or post to the address of the intended recipient, regardless of whether either the intended recipient or his agent was there to receive it. The rule had a sensible and even-handed policy objective behind it, creating certainty for both parties and representing a fair allocation of risk

Our solicitors’ comments on Newcastle upon Tyne Hospitals NHS Foundation Trust v Haywood

Caroline Lewis, a specialist employment solicitor at Redmans, commented on the case: “The ruling is important for employers and employees as the termination date can be decisive in determining an employee’s entitlement to a bonus or other contractual payment, insurance or employee benefits, or the statutory right to claim unfair dismissal and/or redundancy pay, and increased pension rights. While employers may be concerned that this decision creates uncertainty about when notice has taken effect, there are certain practical steps they can take, including drafting their contracts of employment to expressly state when notice is deemed to take effect (e.g. two days after the posting of a letter)”.

The full decision can be found here