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Notice periods

Both employers and employees should understand their rights and obligations relating to notice periods at the end of an employment relationship. This guide explains employment notice periods and answers some of the frequently asked questions.
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When employment comes to an end, it's normally necessary to provide notice, either to the employee or employer. The two main exceptions to this are in the case of gross misconduct and if a fixed-term employment contract reaches its conclusion.

If an employer wants to dismiss an employee on grounds of poor performance or misconduct, or for reasons of redundancy, they must provide notice.

If an employee decides to take up a new job or leave their current employment on good terms (ie where there is no employment dispute), they should submit a Resignation letter and work out their notice.

The Employment contract will normally state the agreed notice period which needs to be given if either the employee or employer wishes to terminate the employment relationship. This is known as the contractual notice period. Contractual notice periods must be at least equivalent to the statutory minimum notice periods as set out in law.

In the absence of a contractually agreed notice period, there are statutory minimum notice periods:

  • 1 week's notice - this must be given by the employer to employees who have been continuously employed for between 1 month and 2 years.

  • 2 weeks' notice - this must be given by the employer to employees who have been continuously employed for at least 2 years.

  • more than 2 weeks' notice - the employee must receive an extra week's notice for each further year of continuous employment up to a maximum of 12 weeks (eg an employee who has been continuously employed for 3 ½ years should receive 3 weeks' notice).

  • no notice - the law does not give the following employees the right to a minimum notice period, but reasonable notice should be given (reasonable notice usually depends on an employee's pay period, so one week's notice if paid weekly):

    • employees that have been employed for less than one month
    • Crown servants
    • seamen under a crew agreement on a UK registered ship

Notice periods during probationary period

The employment contract may give less favourable terms during a probationary period than after the period has finished, and notice periods are usually shorter when the employee is on probation. However, the employer must respect the one week statutory notice period regardless of the probationary period.

Employees dismissed on grounds of poor performance or misconduct should be given at least two formal warnings before notice is given. In the case of gross misconduct, notice does not have to be given, but the correct process should still be followed and the employee should be given a hearing. A different process must be followed if the reason for dismissal is redundancy.

The employment contract, as well as any company policies and procedures, should be followed during the dismissal process. Notice can be given verbally but should be confirmed in writing and will take effect from when it has been received and read by the employee, having first had a reasonable opportunity to do so.

Employees must be paid as normal during their notice period. Their final pay should cover the notice period itself and include payment in lieu of any untaken holidays. If dismissal is due to redundancy, it may also be necessary to make redundancy payments.

It’s normally a matter of courtesy for employees to work out their notice period. Although an employer can potentially pursue a breach of contract claim in cases where a contractual notice period has not been honoured, in practice this is very rare and usually is not worth the expense of legal action.

Employers may decide to obtain an injunction to prevent employees working for a direct competitor during their notice period, or sue for additional costs - or even loss of business - arising from a breach of contract, but these claims are usually only brought against senior executives.

Employees should bear in mind that they may need to ask their employer for a reference unless one has already been provided, so not completing their notice period may result in a less favourable testimonial (although any information contained in a reference should be accurate).

Some employment contracts may allow for a deduction of the final pay if an employee leaves before their notice period is up (see below).

Employers cannot make any deductions to pay in respect of time already worked due to an employee leaving before their notice period is up unless this is specifically allowed by the employment contract. If the contract of employment provides for payment to be withheld, the clause should be clear and obvious and its purpose should be to recoup employer losses not to penalise the employee.

An employer does not have to pay an employee in respect of time which they are unavailable to work during the notice period (eg if the employee starts a new job before completing the notice period and is therefore unavailable) unless this is due to sickness, annual leave or maternity/paternity/adoption leave.

In general, employees are required to work their notice periods. However, there are a couple of exceptions to this rule:

  • payment in lieu of notice (PILON) - this is where an employment contract is brought to an immediate end, with the employer paying the full amount to the employee that they would have received during their notice period, but without any notice actually being worked.
  • garden leave - this refers to the situation where an employee is required to complete their notice period but without going into the workplace (and usually without performing any work). They must be paid as usual during this period. Also called gardening leave (originally because employees were assumed to be tending to their gardens whilst not working), this is often applied to delay (usually senior) employees from joining a competitor.
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