The Problem

Claims under most statutory employment rights must be brought within a limited period of the dismissal.- so clarity as to the date a dismissal takes effect is crucial.

The law states that the effective date of termination (EDT) is either:-

• the date on which contractual notice, given by either party, expires, or
• where notice is not given (such as a summary termination for gross misconduct), the date on which the termination takes effect.

Case law states that a dismissal takes effect when it is communicated to the employee.

So if an employee is told verbally that they are dismissed, with immediate effect, it is pretty clear, providing it is witnessed and, nothing else which is said or done (or not done), cuts across that clarity. It is good practice to confirm any decision in writing as soon as possible. Verbal only communication of dismissal may breach the new ACAS Code of Practice that requires disciplinary process outcomes to be in writing. It is possible that sending a copy of the minutes might fit this criterion, but there is no substitute for a clear letter.

Many employers prefer not to tell the employee in person of their decision on the day for many perfectly good reasons, but not doing so does potentially cause problems as if you are relying on telling them only in a written letter then if the employee fails to receive it, or claims they never received it, then the actual termination date can be disputed.

The time when a written communication takes effect has recently been confirmed by the Supreme Court when it found that where an employer had sent a letter by recorded delivery, summarily dismissing an employee without notice, and the letter was signed for by someone else whilst the employee was away on holiday. The dismissal was not communicated in any other method and so did not take effect until the employee's return from holiday several days later. The dates on which the letter was written, sent or delivered were irrelevant, however, employees who deliberately avoid receipt cannot take advantage of this rule.

On a slightly different tack, but one that will perhaps be more familiar to our clients, there has been another case where, having been given notice of redundancy, the employee is asked to go early and this was agreed, but confirmed ambiguously. This meant that the EDT had not changed at all. Therefore, the employee's claim was in time and could proceed to a full Tribunal hearing. This case further demonstrates that employers should make their intentions clear, and a record made of what was said, when it comes to the departure of employees.

In a very recent case, the Court of Appeal, overturned a High Court ruling, holding that on the proper construction of the emplyee's contract the termination took effect when the employer actually paid money into a bank account, even though the employee was unaware of the payment for several weeks. This was a breach of contract claim for circa £10 million in bonus. The Court stressed that the date of termination at common law is not necessarily the same as the statutory concept of the 'effective date of termination' for the purpose of unfair dismissal under the Employment Rights Act 1996. In other words the latter requires actual or constructive knowledge of termination on the part of the employee.

The Learning

Organisations that dismiss, with or without notice, can face uncertainty as to the exact EDT unless the EDT is clearly expressed to the departing employee.

A later than expected effective date of termination (EDT) could:-

• allow an employee to gain a year's service, and the right to claim unfair dismissal;

• result in a longer time for the employee to submit their unfair dismissal claim;

• entitle the employee to contractual or statutory benefits, bonus or commission payments which would otherwise not be due;

Our Solutions

Organisations should consider the following options if dismissing with or without notice:-

• checking and recording in writing, at the disciplinary hearing, whether the employee has any booked and/or planned holiday or other absence in the foreseeable future, and confirming the employee's availability to receive the decision in writing by post and/or email;

• ask the employee to provide a personal email address and then mark the email sending the letter with a "read receipt";

• hand deliver 'without notice' dismissal letters preferably requiring the employee's signed acceptance of receipt;

• arrange to telephone the employee to communicate the decision and make sure someone is there to hear what is being said:

• if there is a risk that an employee may not be available to receive a letter, confirm a summary dismissal verbally to the employee in person in a meeting after the disciplinary process concludes; then ask them to wait in order to compile and later hand over in person a confirmatory letter (make sure that the letter has not been written prior to the event - in anticipation of the outcome!).

It is very important that the letter is clear about the effective date of termination, and that nothing should otherwise give a contra-indication, such as P45, extending benefits or other ambiguous wording.

Where an employee is entitled to notice, employers should ensure that an employee is given the contractual or statutory notice period that they are entitled to, or paid in lieu of their notice entitlement. When providing a pay in lieu of notice payment this must be processed as soon as possible otherwise again the actual EDT could be later challenged if the employee ended up waiting for several weeks for final payments. If an alternative leaving date is agreed with the employee, this should be set out clearly in writing.