In many commercial contract situations, a party can attempt to bring the contract to an end by serving notice of termination. Often that notice is said to be properly ‘served’ on the receiving party if it is sent to their address. There is no need to prove that the receiving party has read the notice for the service of it to be effective.
However, a contract of employment is different and a recent case recognises this in relation to the service of notice of termination.
In a recent Court of Appeal case, an employee had worked for an NHS Trust for many years and her contract required 12 weeks’ notice of termination of the contract to be given by either party. Her contract also included a provision whereby if her contract was brought to an end due to redundancy on or after her 50th birthday, she would be entitled to better pension terms.
The Trust sent a redundancy notice to the employee by first class post, recorded delivery and email. It arrived whilst the employee was on holiday and she did not read it until she returned from holiday. This was crucial to the case.
If the notice was deemed to be served when it was sent by the Trust, the employee was not entitled to the improved pension terms. If it was deemed to be served when she read it, she would be entitled to the better pension.
The first court found in favour of the employee and the Court of Appeal agreed with this approach and the matter was appealed to the Supreme Court.
Unsurprisingly the Trust tried to argue that the notice was given when the letter was delivered to the address, an argument in line with past cases – many of which involved landlord and tenant matters.
The Supreme Court held that the notice of termination, delivered by letter does not start to run until it is read by the employee.
This decision is significant first because the Supreme Court is the highest appeal court in England and Wales so its decisions are important. Second the decision recognises the unique and personal nature of the contract of employment. It is said that the notice 'must have been communicated or come to the mind of the addressee'.
The Supreme Court accepted the fact that a contract of employment can displace this position as the contract can specify how notices under it are to be served and when they are deemed to be received.
The significance of this decision for employers is that they should be conducting a review of their employment contracts to ensure that they are clear as to the method of service and receipt of notices.
If you would like to discuss this or any other employment related issue, contact us.