Nina Robinson from ESP Law explains the ins and outs of dismissal, from statutory and contractual notice periods to garden leave and working the notice period
The recent Supreme Court ruling in Newcastle Upon Tyne NHS Foundation Trust v Haywood has brought the deceptively difficult principle of effective service of notice back into the spotlight. In this article, we explore the learning points from that case and explain what employers need to know about serving notice of dismissal on employees.
Ms Haywood’s employer informed her that she was at risk of redundancy approximately three months before her 50th birthday. Redundancy after the age of 50 would have entitled Ms Haywood to a significantly more generous early retirement pension than if she was made redundant at age 49. The timing of the notice was therefore crucial to ensure that it could expire and the dismissal take effect before her 50th birthday.
The NHS trust followed the redundancy process and were ready to serve notice of dismissal; the notice would need to be served before 27 April for the dismissal to take effect before her birthday. Ms Haywood was on holiday from 19 April, returning on 27 April. The NHS trust sent the notice of termination by recorded delivery and ordinary post. Ms Haywood’s father-in-law collected the letter from the post office on 26 April and left it at Ms Haywood’s home address the same day. Ms Haywood returned home in the early hours of 27 April and read the letter later that same day.
The question for the Supreme Court was: when was notice effectively served? A majority ruled that when written notice is given, there is an implied term that states that the notice period does not start to run until the employee has read the notice or has reasonable opportunity to read the notice. Therefore, Ms Haywood was given notice of dismissal on 27 April and she was entitled to the more generous pension provision.
This legal principle of notice only being effectively served when read by the employee, or them having reasonable opportunity to read it, only applies where the contract is silent on this point. The Supreme Court acknowledged that it is perfectly possible for an employment contract to expressly state when notice will be deemed effectively given, for example when the written notice is delivered to the employee’s home address.
Employers would therefore be well advised to revisit contracts of employment in light of the Supreme Court’s ruling and tighten up wording relating to service of notice.
The above issues with service of notice can also be avoided by giving notice of dismissal to employees verbally and following this up in writing.
What else do you need to know about notice?
Statutory minimum notice requirements
The Employment Rights Act 1996 sets out a statutory obligation on employers and employees to serve notice to terminate employment. In cases where the contract of employment provides for employers to give shorter notice than the statutory minimum, the statutory provisions are effectively imported into the contract of employment and take effect as if they were the express contractual entitlement to notice.
Length of statutory notice
The statutory notice provisions only apply to employees who have been continuously employed for one month or more. The statutory notice periods that the employer is required to provide to the employee are as follows:
- More than one month but less than two years’ service – one week’s notice of termination
- More than two years but less than 12 years’ service – one week’s notice for each complete year of continuous service
- More than 12 years’ service – 12 weeks’ notice
The statutory notice period that the employee is required to provide to the employer is:
- More than one month’s service – one week’s notice of termination
The above minimum notice periods apply except where the conduct of one of the parties entitles the other party to terminate the contract with immediate effect.
The contractual notice provisions must provide for a period of notice greater than or equal to the statutory minimum notice entitlements. Where the parties have agreed express contractual notice, failure to provide this will be a breach of contract and wrongful dismissal by an employer. In situations where there is no express contractual notice clause, the courts will apply the relevant statutory notice period or, in some cases, ‘reasonable notice’ if different.
Working notice, garden leave or payment in lieu
The normal position is that during any period of notice the employment contract will continue to operate as normal, the employee will attend work, and the employer will continue to provide remuneration and other contractual benefits. The employment will then terminate on expiry of the notice period.
Employers can reserve the contractual right to pay employees in lieu of notice thereby terminating the employment immediately rather than at the end of the notice period. The contractual provisions should specify what exactly is due to the employee if this option is exercised by the employer, ie is the payment in lieu in respect of basic salary only or other benefits and entitlements.
If there is no pay in lieu of notice clause in the contract, it is a breach of contract to make a payment in lieu. This can have the effect of preventing the employer from seeking to enforce other contractual terms such as restrictive covenants.
Another option for employers is to continue with the notice period but exercise a contractual right to put the employee on garden leave. When an employee is on garden leave their employment continues until the end of the notice period and they are entitled to remuneration and contractual benefits in the usual way, but they are not required to attend work.
If there is no existing contractual right to place an employee on garden leave, then doing so may be a breach by the employer of the employee’s implied contractual right to work. This is most likely to be the case in particularly specialised roles where regular use of skills and knowledge is important.
Effective service of notice
Notice can be given verbally or in writing, but it must be clear and unambiguous so that both parties understand what has taken place. As noted above, it is possible to contractually agree and expressly specify the mechanics of how notice will be served. In the absence of express terms it will be implied that notice is served when effectively communicated.
Calculating the date of expiry of notice
For the purposes of calculating the notice period, the day upon which notice was actually served will be discounted. For clarity it is recommended that when notice is served, however it is done, this is confirmed in writing and the actual date of termination is specified.
Notice periods expressed in weeks should be observed, ie if one full week’s notice is effectively given on Friday 1 May, then the last date of employment will be Friday 8 May.
Where notice is expressed in months then the corresponding date rule applies, ie if three months’ notice is effectively served on 1 May then the last date of employment will be 1 August (fluctuation in the number of days within each month is irrelevant). An additional complication can arise where notice is effectively given and expires where there is no corresponding date in the month of expiry, ie one month’s notice is effectively given on 31 August and there is no 31 September. In this case the employment will terminate on the last day of the month in which the notice expires (30 September in this example).
Can notice be withdrawn?
Once validly given, notice of termination of employment cannot be withdrawn unilaterally. If the employer has given notice to an employee (for example, on a redundancy dismissal) and then decides that it does not want the dismissal to go ahead, the employee would have to agree that the notice can be treated as withdrawn.
Dismissal during notice period
It is possible to dismiss an employee summarily/without notice for gross misconduct during the notice period, bringing the termination date forward. This may be attractive to employers who are in the process of conducting a disciplinary procedure when the employee resigns on notice and the employer continues with the disciplinary process and reaches a decision to dismiss summarily.
Similarly, it is possible for an employee to be constructively dismissed while serving their notice. A resignation by the employee in response to a fundamental breach of contract on the part of the employer will therefore bring the date of termination forward.
Nina Robinson is a director at ESP Law Ltd. This post was powered by esphr – a CIPHR strategic partner. Talk to a very different employment law firm and HR business partner on 0333 006 2929 or find out more at www.esphr.co.uk.