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Employment Update: Effective date of termination - resignation letter

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Employment Update: Effective date of termination - resignation letter

Establishing an employee's "effective date of termination" (EDT) is important as it determines when an employee should bring a claim for unfair dismissal. A recent case has provided a useful reminder of the case law in this area and the issues to consider when establishing the EDT.

In Horwood v Lincolnshire Council, the Employment Appeal Tribunal (EAT) confirmed that where an employee sent a letter to her employer indicating that she was resigning with immediate effect, the EDT was the date on which her letter was opened and date-stamped at her employer's offices. When her employer subsequently said that her resignation would be taken as commencing on a later date, this did not change the EDT.

Ms Horwood had been subjected to a disciplinary hearing which led to her receiving a final written warning, being demoted and moved to a different office. On 28 January 2010, Ms Horwood sent a letter to the Chief Executive, resigning with immediate effect and confirming that she intended to submit a claim for constructive unfair dismissal. She sent the letter by special delivery to the Chief Executive and two other employees. Her letter was opened at the employer's office by administrative staff the next day and was date stamped 29 January 2010. On 2 February 2010, the employer wrote to Ms Horwood, stating that it accepted her resignation, which would commence from the date of its letter i.e. 2 February 2010. Ms Horwood was paid salary up to and including 2 February 2010 and received her pension from 3 February 2010.

Ms Horwood sent a claim form by post to the employment tribunal dated 28 April 2010 and it arrived on 29 April 2010. The employer alleged that the claim was out of time as it had not been brought within three months of the EDT, as required under the Employment Rights Act 1996.  The employment judge agreed. The resignation was communicated on 29 January 2010 and this was the EDT. The last date upon which the tribunal should have received her claim form was 28 April 2010. When it received the form on 29 April 2010, her claim was therefore out of time. Ms Horwood appealed.

The EAT dismissed the appeal. The EDT was 29 January 2010 and it had not been subsequently varied. The EAT commented that a number of appellate decisions have emphasised that the EDT is not a term of contract law but a statutory construct, designed to hold the balance between employer and employee and conventional principles of contract law should not come into play in its interpretation.  In the context of an employer who dismisses an employee without notice, the employee needs to know that they have been dismissed before they can be expected to take action, given that the purpose of the legislation is to protect employees' rights. However, these concerns do not arise when the decision to leave is that of the employee. In such cases, the EDT is the date on which that information is effectively communicated to the employer.

In this case, the letter of resignation, with immediate effect, was unequivocal in its terms. Once the letter was received at the offices, and opened and date-stamped by the administrative staff, the communication of Ms Horwood's resignation was effective. The fact that the letter may not have been read by any of its intended recipients on 29 January 2010 did not prevent that date from being the EDT. The subsequent decision to inform Ms Horwood that her resignation would commence from a later date could not alter the EDT, which had already occurred, nor could the fact that Ms Horwood continued to receive salary until 2 February 2010 and her pension from 3 February 2010.  The EAT also confirmed that the EDT had not been subsequently varied in this case. The EDT was fixed and could not retrospectively be altered.  The EAT also rejected the argument that it was not reasonably practicable for Ms Horwood to issue her claim in time because she had been misled by her employer. The problem had arisen because of a misunderstanding between Ms Horwood and her legal adviser.  The tribunal's decision that the claim was out of time was therefore upheld by the EAT.

This case highlights the key issues for employers to consider when establishing an employee's EDT. If an employer summarily dismisses an employee by letter, earlier case law has confirmed that the EDT is the date on which the employee reads the letter or has a reasonable opportunity of discovering the contents. Where an employee resigns by letter with immediate effect, the EDT is the date on which that information is effectively communicated to the employer. In this case, once the resignation letter was opened and date-stamped at the employer's offices, this constituted effective communication of the resignation.

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