It works both ways

25 May 2012

The effective date of termination of employment has long been an issue for employers: a letter sent by an employer setting out the employer’s decision to terminate the employee’s employment with immediate effect does not take effect when the letter is written, rather it takes effect when the employee reads the letter.

The difficulty that this causes employers is clear: when an employee is not told of the decision to dismiss verbally, the effective date of termination will only be when the employee reads the letter.  This causes significant uncertainty: what if the letter is lost in the post or left on the side with unopened bills?  The answer is that the effective date of termination will be delayed until the letter is finally read.

From an employer’s perspective, therefore, it is essential that an employee is told verbally that their employment has been terminated and that this is then followed up by a letter.

This uncertainty has long played into the hands of employees who could claim they were away when the letter arrived or that their child put it in their rucksack and forgot about it; however, in the recent case of Horwood v Lincolnshire County Council the Tribunal has confirmed that this uncertainty works both ways.

In this case, Mrs Horwood resigned following a disciplinary which resulted in her receiving a demotion.  On 27 January 2010, Mrs Horwood wrote to her employer, Lincolnshire County Council, to tender her resignation.  It would be fair to say that Mrs Horwood left her employer with no illusions that she was departing on friendly terms: her resignation letter said:

“In the circumstances, I am resigning from the employment of LCC with immediate effect, as I am not prepared to ‘waive’ the Council’s fundamental breaches of contract towards me.

In these circumstances, there is no requirement on me to work any ‘notice period’ and I do not intend to do so.

I need only add that I intend in due course to submit a claim of ‘constructive unfair dismissal’ to the Leicester Employment Tribunal.”

Mrs Horwood letter was opened by a member of staff at the Council on 29 January 2010.  There was no evidence to suggest that any of the senior staff members, to whom the letter was addressed, read the letter on 29 January 2010, only that it had been received by the Council.

On 2 February 2010, the Council responded to confirm that Mrs Horwood’s last day of employment would be 2 February 2010 and this letter was received by Mrs Horwood on 3 February 2010.

It probably came as no surprise to the Council, in light of Mrs Horwood’s subtle threat in her letter, that Mrs Horwood issued a claim for constructive dismissal.

Mrs Horwood claim was presented to the Tribunal on 29 April 2010, less than three months after Mrs Horwood had been told was her last day of employment and, therefore, on the face of it in time.

The Tribunal, however, found that the claim was out of time, and therefore the Tribunal had no jurisdiction to hear her claim, on the following grounds:

1. the effective date of termination is a matter of law; not something to be decided between the parties;
2. Mrs Horwood’s decision to resign with immediate effect was communicated to the Council on 29 January 2010;
3. Mrs Horwood’s effective date of termination was, therefore, 29 January 2010;
4. it did not matter that the actual addressees at the Council had not read the letter on 29 January 2010, only that it had been opened by staff at the Council; and
5. the fact that Mrs Horwood had been told that her employment finished on 2 February 2010 did not matter: the effective date of termination is determined by law, not by what either party actually thinks.

In order to accommodate this decision the Employment Appeals Tribunal had to explain what the purpose of the pay Mrs Horwood had received between when her employment terminated on 29 January 2010 and 2 February 2010 actually was.  The EAT found that it was not wages; it was an ex gratia payment, despite neither party considering it as anything other than wages at the time.

Our view:

This case highlights two key factors in employment litigation:

Firstly, the importance of considering what is the legal date of termination, rather than simply what is stated in the resignation or termination letter.

Secondly, how essential it is to submit either a claim well in advance of the Tribunal deadline.  We always recommend submitting a claim or a response at least seven days before the Tribunal deadline.  Had Mrs Horwood’s advisors followed our practices, it would not have mattered that he had miscalculated the effective date of termination and the claim would have been accepted; however, that would mean that we would not now have the benefit of this helpful case.