Effective Date of Termination

Key Points

  • The effective date of termination (“EDT”), which is a statutory construct, is important as it establishes the end of the period of continuous employment.
  • It impacts time limits as the time for presenting many claims is calculated by reference to the EDT. 
  • After the EDT an employee can request a written statement of reasons for their dismissal.

Effective date of termination

The effective date of termination (“EDT”) is a statutory construct which is defined in ERA 1996 s.97.  Conceptually the EDT is the date on which an employee’s contract of employment is treated as having been terminated (that is terminated as defined by statute and so it may differ from the termination date under common law).  The EDT therefore establishes the end of the period of continuous employment.  The redundancy law equivalent to the EDT is “the relevant date” (ERA 1996 s.145, which uses similar wording to ERA 1996 s.97).

As the EDT is a statutory construct the date upon which it falls depends on the Tribunal’s objective assessment of what has happened between the parties over time and not what the parties may agree to treat as having happened: Fitzgerald v University of Kent at Canterbury CA [2004] ICR 737.

Relevance of EDT

Determining the EDT is important as

  • It establishes the end of the period of continuous employment, so it is relevant in determining if an employee meets the requisite qualifying period and it will also impact the level of compensation for redundancy pay, the basic award in unfair dismissal, and is relevant to calculating a week’s pay.
  • It impacts time limits as the time for presenting many claims is calculated by reference to the EDT.  Indeed even in the discriminatory dismissal context the EDT is important as if the act of discrimination is a dismissal time runs from the date on which employment terminates (which would be the EDT) and not the date notice was given: Lupetti v Wrens Old House Ltd [1984] ICR 348
  • After the EDT an employee can request a written statement of reasons for their dismissal

Note that where an employee is dismissed with notice they can bring a claim before the EDT occurs so long as the claim is brought after notice has been given: ERA 1996 s.111(3).

EDT if employer dismissed employee “with notice”

Where an employee is dismissed “with notice” by their employer, the EDT is when the notice expires: ERA 1996 s.97(1)(a).  Determining this date is fact specific and will require one to construe the oral or written notice given.  In approaching the task of construing any notice of dismissal: i) the notice should not be treated technically but reflect what a reasonable employee’s understanding would be in light of facts known to them at the time and ii) in the event of any ambiguity the notice should be construed in favour of the employee (the so-called contra proferentem rule): Chapman v Letheby [1981] IRLR 440.

In terms of calculating when notice given starts to run (which is relevant to work out when the notice expires), it is the day after notice was given.  This is so irrespective of whether notice is given orally or in writing (Wang v University of Keele [2011] IRLR 542 (EAT)). So if an employee is given 3 month’s notice on 3 November, as time starts running the day after notice is given (ie 4 November), the notice will expire on 3 February which would be the EDT.  It should be noted though that the parties may contractually agree for notice to run immediately upon receipt and so this rule is only relevant if there is no contractual agreement.

Finally, it is irrelevant to the EDT that the employee is not required to work during the notice period or does not actually work – the EDT will still be when notice expires: Adams v GKN Sankey Ltd [1980] IRLR 416 (see also further below under “PILON and its effect on the EDT”) and Wedgewood v Minstergate Hull Ltd UKEAT/0137/10/DA (see further below under “Varying the EDT”).

EDT if employer dismissed employee “without notice”

Where an employee is dismissed “without notice” by their employer, the EDT is when termination takes effect: ERA 1996 s.97(1)(b) (likewise for those on fixed term / limited term contracts which is not renewed the EDT is when the termination takes effect, that is when the term expires: ERA 1996 s.97(1)(c)).

Dismissal “without notice” takes effect at the precise moment it is communicated (and it is not effective before this point): Kirklees Metropolitan Council v Radecki CA 2009 ICR 244 and Octavius Atkinson & Sons v Morris [1989] IRLR 158.  It is irrelevant to the EDT that the dismissal may have been a wrongful dismissal: Brown v Southall and Knight [1980] IRLR 130.  Equally so far as the statutory construct of EDT is concerned an employee cannot alter this by refusing to accept a summary dismissal and arguing that it amounts to a repudiatory breach which they are electing to affirm to keep the contract alive: Cort (Robert) & Son Ltd v Charman EAT [1981] ICR 816, EAT (note however that that the position in common law is different as an employee can elect to continue with the contract, see Geys v Soc Gen [2012] UKSC 63, although the EAT has made clear that this ‘common law’ approach does not apply for the statutory concept of the EDT, see Duniec v Travis Perkins Trading Co Ltd UKEAT/0482/13).

The Supreme Court’s judgment in Gisda Cyf v Barratt [2010] ICR 1475 reaffirms much of the paragraph directly above: a written letter summarily dismissing the employee is only communicated when it is read by the employee, or they had a reasonable opportunity to read it (which should be judged subjectively in that the focus should be on the reasonableness of the employee’s behaviour in failing to discover what the letter contained, rather than the mere existence of the opportunity to do so) rather than the date it was posted.

It will be a question of fact (and construction) whether and when the conduct, for example an oral dismissal or written dismissal amounts, amounts to a summary dismissal or not.  As with dismissal with notice where there is ambiguity it should be construed in favour of the employee (see above case of Chapman v Letheby [1981] IRLR 440). A useful more recent case dealing with much of the above and its practical applications is Feltham Management Ltd v Feltham UKEAT/0201/16

 

EDT in constructive dismissal cases / EDT when it is the employee who resigns

ERA 1996 s.97(1) makes no distinction as to whether the contract is terminated by the employer or employee.  So the same principles set out above apply even in cases of constructive dismissal – therefore:

The one issue that has caused some confusion is where an employee resigns by letter which states the resignation is to take “immediate effect” (that is resignation without notice) at what point in time will it be deemed to be communicated?  In light of Gisda Cyf v Barratt [2010] ICR 1475 some argued mere receipt would not suffice.

The EAT in Horwood v Lincolnshire UKEAT/0462-3/11 held that the EDT for a resignation with immediate effect is when the communication is received by the organisation (in this case this was when it was marked as date stamped by the administrative staff on 29 January) and not when it is actually read.  This case relied upon the earlier decisions of the EAT in George v Luton Borough Council, EAT 16th September 2003 (EDT is when letter of resignation received by the organisation) and Potter v RJ Temple, EAT on 18th December 2003 (EDT is when fax received even though this was out of hours).  Additionally the EAT stated in essence that the policy behind Gisda Cyf v Barratt [2010] ICR 1475 was inapplicable in constructive dismissal cases as the employee knows when they resign and has the control of fixing that date.

However, the EAT in Vasella Ltd v Eyre UKEATS/0039/11 did rely upon Gisda Cyf v Barratt [2010]ICR 1475 and stated that to the extent it differed with Horwood v Lincolnshire UKEAT/0462-3/11 it respectfully disagreed with their approach.  In Vasella Ltd v Eyre UKEATS/0039/11 the employee hand delivered a letter on Sunday 21 November to her workplace which stated that she was resigning “with immediate effect”.  She had actually dated the letter 22 November as she expected it to be read on that day (the Monday).  Despite the letter having been received on Sunday 21 November, the EAT held that the EDT was 22 November as the employee had no reason to believe that it would be communicated to her employer before then.

It may well be that the cases of Vasella Ltd v Eyre UKEATS/0039/11 and Horwood v Lincolnshire UKEAT/0462-3/11 are not completely at odds as Vasella Ltd v Eyre UKEATS/0039/11 decision turned in part on construing the notice of resignation which was dated with a future date (ie 22 November) despite using the words “immediate effect” and being delivered on 21 November.  However, given the potential apparent conflict at EAT level it is not clear whether the traditional pre- Gisda Cyf v Barratt [2010] ICR 1475 mere receipt of the resignation without notice position always being the EDT remains true.

Statutory extension of EDT

If the notice given is less than the statutory minimum notice period required by ERA 1996 s.86  then the EDT will be extended for the purposes only of

The extension means that the requisite minimum notice period will be added actual notice given for these purposes only and the EDT will be treated as falling on that later date (the same is true if the employee is the one who terminates the contract: ERA 1996 s.97(4)).

This extension will even apply if the employee waives their right to statutory minimum notice or receives a PILON: Secretary of State for Employment v Staffordshire County Council [1989] IRR 117.

The extension however will not apply if the employer establishes before a Tribunal that it was entitled to summarily dismiss the employee (as in such circumstances ERA 1996 s.86(6) is inapplicable) Lancaster & Duke Ltd v Wileman UKEAT/0256/17(see also Lanton Leisure Ltd v White and Gibson [1987] IRLR 119.

For the avoidance of doubt, the statutory extension to the EDT is irrelevant to calculating time limits – the EDT for these purposes is as already described above.

PILON and its effect on the EDT

The effect PILON (payment in lieu of notice) has on the EDT depends upon whether when construed the PILON is (as explained in Adams v GKN Sankey Ltd [1980] IRLR 416)

  1. dismissal without notice, that is damages for wrongful dismissal – in such cases the EDT is when termination takes effect (see generally section above “EDT if employer dismissed employee “without notice” – summary dismissal”);
  2. dismissal with notice, that is the employee is being paid for his notice but is not required to work and still bound by the employment contract (often referred to as Garden Leave) – in such cases the EDT is when notice expire (see generally section above “EDT if employer dismissed employee “with notice”).

Appeals against dismissal and its effect on the EDT

If an employee’s appeal against dismissal succeeds than they are reinstated with retrospective effect, so the period of continuous employment will not be treated has having been broken by the earlier dismissal: Sainsbury J Ltd v Savage CA [1981] ICR 1 and West Midlands Co-Op Society Ltd v Tipton HL [1986] ICR 192.  Note however if the appeal is partially successful then:

  • in cases where the date of termination is deliberately extended by the appeal panel (ie employee is given more notice period) the extended date is the EDT: Hawes & Curtis Ltd v Arfan [2012] ICR 1244;
  • in cases where an employee is downgraded or not returned to the same post it will be a question of fact whether what the employer is doing is re-engaging the employee on a new contract (so EDT remains the original date of dismissal) or not (so the rule for reinstatement set out above applies which is what occurred in BBC v Beckett [1983] IRLR where the dismissal sanction was downgraded to a demotion and the EDT then became the employee rejecting the downgraded post).

If an employee’s appeal against dismissal is unsuccessful (see above for partial success notes) than the issue is whether the contract or the notice of dismissal provides for the employment relationship to continue pending the appeal outcome.  If it does not, which is the usual case, the EDT remains the original dismissal (so an employee who awaits the outcome of an unsuccessful appeal may be out of time to claim unfair dismissal): Sainsbury J. Ltd v Savage CA [1981] ICR 1 and West Midlands Co-Op Society Ltd v Tipton HL [1986] ICR 192.  If however the contract or notice does provide for the relationship to continue the EDT will not be the initial dismissal but the date the employment relationship terminates (eg Drage v Governors of Greenford High School CA [2000] ICR 899 and Wishmorecross School Governing Body v Balado UKEAT/0199/11).

Varying the EDT

The starting point is that as the EDT is a statutory construct which is objectively determined according to rules in ERA 1996 s.97, (just as the start date of a contract must be determined in accordance with rules set out in ERA 1996 s.211) it cannot be retrospectively changed by agreement (see Fitzgerald v University of Kent at Canterbury CA 2004 ICR 737 and Heaven v Whitbread Group Plc EAT on 8th April 2010) and equally the parties cannot agree to change the EDT from that which would be calculated according to ERA 1996 s.97 (see Davies v TB Turbos Ltd EAT 2004 on 24th March 2004 and see also Waterman v AIT Group plc, EAT 4th November 2005). A more recent example of this is Cosmeceuticals Ltd v Parkin UKEAT/0049/17 where the ET found there had been a summary dismissal by conduct, and so the EAT found that the later notice of dismissal given (which in fact the parties worked towards as the EDT) did not vary the EDT (although the matter was remitted to decide whether the ‘not reasonably practicable’ extension should apply).

However this still leaves open the position where the EDT can be varied before it occurs see eg Palfrey v Transco plc EAT 2004 IRLR 916 and Wedgewood v Minstergate Hull Ltd, EAT on 25th June 2010.  Of course after the EDT it is too late as the recent unusual case of Lawal v Birmingham & Solihull Mental Health NHS Foundation Trust UKEAT/0592/12 illustrates nicely.  In that case the employee who it was suggested may be subjected to disciplinary investigation as a result of absence from work tendered contractual notice of resignation by letter dated 21 April to expire on 21 July.  Before expiry of this notice, the employer suggested that it would accept a first written warning and repayment of the employer’s salary in order to draw a line under the outstanding disciplinary investigation.  The employee did not accept this and never returned to work.  Despite this the employer proceeded with disciplinary proceedings, which resulted in it allegedly summarily dismissing the employee by letter of 6 December.  The EAT confirmed that the subsequent purported dismissal was a nullity and the EDT was when the resignation notice expired on 21 July.

So during the notice period either side can foreshorten it and so bring forward the EDT:

  • the employer can unilateral serve a second notice of dismissal (or even summarily dismiss within the notice period): Parker Rhodes Hickmotts Solicitors v Harvey UKEAT/0455/11 and Strapp v Shaftesbury Society [1982] IRLR 326 (CA) – the EDT will be the expiry of this second notice of dismissal, or if summarily dismissed within the notice period the date this takes effect;
  • the employee can serve a counter notice under ERA 1996 s.95(2) setting an earlier date to terminate the contact (note though it is still treated as having been a dismissal by the employer) – the EDT will be this earlier date when the counter notice expires: Thompson v GEC Avionics [1991] IRLR 488.  It is also possible that the employee might resign with immediate effect during the period of notice.

Similarly, parties can agree to foreshorten the notice - although where this has come at the behest of the employer Tribunals often treat this as an agreement to waive the need for the employee to present themselves for work: Staffordshire CC v SS for Employment [1989] ICR 664 (CA) and Lees v Arthur Greaves [1974] IRLR 93. It will be a question of fact and construction as to whether the notice was actually foreshortened or whether the employee was merely not required to work the remainder of the period of notice (but during which the employment contract still remained in existence).  See eg. HW Smith (Cabinets) Ltd v Brindle [1973] ICR 12 (CA). 

It is also possible for the parties to agree to extend the notice (which will equally extend the EDT): Mowlem Northern Ltd v Watson [1990] IRLR 500 (although the case is in a redundancy context).The EAT in reviewing the case law on this issue seems to have endorsed such an approach: Wallace v Ladbrokes Betting and Gaming Limited UKEAT/0168/15.