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New term implied into all new contracts of employment

The Supreme Court has held in the case of Newcastle upon Tyne Hospital NHS Trust v Haywood that a term will be implied into all contracts of employment that written notice of termination will only start to run from the date the employee has received the letter and the employee has had a reasonable opportunity to read it.

Background

The Claimant worked for Newcastle upon Tyne Hospital NHS Foundation Trust (“the Trust”) and was informed that she might be made redundant.

The Claimant was entitled to 12 weeks’ notice of termination and if this was served any later than 27 April, the notice would expire after her 50th birthday. This was important as if the Claimant’s employment was terminated before her 50th birthday, she would not be entitled to receive an early retirement pension worth around £400,000.

The Claimant was on a pre-booked holiday when the Trust sent written notice of termination by recorded delivery to her home address on 20 April and also to the Claimant’s husband’s email address.

The Claimant’s father in law picked up the letter from the Post Office on 26 April and she opened and read the letter on her return from holiday on 27 April. The Claimant’s husband also opened the email on 27 April.

The Trust argued the notice was effective from the date of delivery (i.e. 26 April). The Claimant argued it was 27 April, when she read it, which meant that it would expire on her 50th birthday and she would be entitled to the early retirement pension benefits.

Decision

The High Court and Court of Appeal ruled in favour of the Claimant. The Trust appealed.

The Supreme Court held that notice could only run from the date that the employee receives written notice of their dismissal and has had a reasonable opportunity to consider it.

As the Claimant had been on holiday when the notice had been delivered she had not had reasonable opportunity to read it until she returned.

The Claimant was therefore entitled to the early retirement pension benefits.

Comment

This Supreme Court decision means that in the absence of an express contractual provision it will be implied into all contracts that written notice will not be effective until the employee receives it and has had reasonable opportunity to read it. To avoid such a term being implied into contracts of employment, employers should ensure that an express contractual term setting out how notice will be served and when it will be deemed to be received is included in the terms and conditions of employment.

It is also best practice to inform employees verbally that notice is being served and then follow up the conversation in writing to avoid disputes.

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