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Effective Date of Termination

What is effective date of termination?

The effective date of termination (EDT) is the date on which an employee’s continuous employment ends. The law (Section 97 Employment Rights Act 1996) defines the EDT as:

  • The date on which the employee’s notice expires (where employment has been terminated with notice); or
  • The date on which termination takes effect (where the employee has been dismissed without notice).

The EDT will not change just because an employee is told that they do not have to come into work during the notice period (for example, if they are placed on ‘garden leave’).

However, if an employer exercises a right under the contract to make a ‘payment in lieu of notice’ (PILON) the EDT will fall on the day the employee ceases work, and not at the end of the notice period. The position may be different if there is no clause in the contract authorising the employer to make a PILON.

Why is the effective date of termination important?

Establishing the EDT is important to determine the date by which an employee must make an employment tribunal claim. For example, an employee has three months from the EDT to bring a claim for unfair dismissal (although the employment tribunal may, exceptionally, use its discretion to extend that time limit). This period will also be extended if the parties take part in ACAS Early Conciliation.

It may also be important to pinpoint the EDT to determine whether the employee is entitled to a particular contractual benefit; for example, an annual bonus will very often only be payable to employees who are in-post and not serving notice at a particular date.

When does notice start to run?

Where notice is given, the EDT be the date on which notice expires; but when does notice take effect? Sometimes, the contract of employment will contain provisions dictating when notice starts to run. However, if it does not, case law suggests that notice of dismissal will only be effective once it has been drawn to the employee’s attention. For example, where notice is communicated by post, the notice period will only start to run when the employee has read the letter in which it was communicated or has had a reasonable opportunity to do so. Notice may not be effective if a letter is sent to an employee’s home address when they are not there.

In the Supreme Court case of Newcastle Upon Tyne Hospitals NHS Foundation Trust v Haywood [2018] the employer sent a letter of termination to the employee's home address by recorded delivery while she was on holiday. In her absence, a family member took the slip to the sorting office, retrieved the letter and left it at the employee's home while she was still away. The court held that the notice of termination did not take effect until the employee had personally taken delivery of the notice when she returned to her house from holiday and saw and read the letter.