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Blog • 17.11.22

What is a notice period?

Sian H
Junior HR Consultant

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A notice period is an important condition of employment. A notice period is the time between an employee handing in their resignation and the date that they propose to leave. It also refers to the amount of time between you making an employee redundant and their last day of work.

Although notice periods work both ways, the employee and employer notice periods do not need to be the same. For example, the notice period an employee needs to give to you can be longer than the notice you need to give to them.

We know there can be some confusion around what the correct amount of notice is to give to or receive from departing employees, so we’ve put together this blog to help you figure it out.

Notice period for redundancy

If you decide to make an employee redundant, they’ll be legally entitled to a statutory notice period. The length of this notice period differs according to how long the employee has worked for you.

  • If they’ve worked for less than a month, there is no statutory notice period.
  • If they’ve worked continuously for more than a month but less than two years, they’ll be entitled to one week’s notice.
  • After two years, one additional week will be added for each year continuously worked. For example, an employee who’s worked for five years will get five weeks. The maximum number of weeks’ notice that can be given is 12.

Take note of the phrase ‘continuously worked’. Your employee may have held a previous role within your company or been transferred through TUPE. Both circumstances will count as continuous service.

You can choose to give more notice than the statutory amount by detailing this in an individual’s employment contract. However, you cannot give them less, as this will be unlawful.

Notice period for resignation

If your employee decides to hand in their resignation, they must give a minimum of one week’s notice. So, if they hand in their notice on a Friday, their last day will be the following Friday.

You can decide to extend this period of notice by specifying a different amount in their employment contract. A common length of notice to give is one month. When deciding the notice to put in the contract, consider the level of seniority the individual has and how much time you’d need to organise a replacement and get back on track if they leave.

An employee can give as much notice as they want and can give longer than their contractual notice period. If this happens, it is the employer’s obligation to pay the employee (potentially in lieu) until that date.

You cannot make them leave earlier than their contractual or statutory notice (whichever is greater). If you do so, this could lead to a claim of unfair dismissal.

It’s a good idea to have your employee hand in their notice in writing so that you have a record to refer back to if needed. The resignation notice should state when their last day of work will be.

Notice period pay

Whether they resign or are made redundant, an employee should always be paid their basic pay as well as any entitlements to bonuses, sick pay, overtime pay etc. If made redundant, they should also receive statutory redundancy pay.

If you don’t want your employee to work their notice, you have two options:

1. Garden leave

The employee is still contracted to you during their notice period but does not carry out any of their duties. Instead, they receive a payment as compensation for not having worked during their notice period.

2. Pay in lieu of notice (PILON)

Like with garden leave, the individual receives a payment instead of working their notice period. However, their contract ends as soon as notice is given, so they immediately cease to be an employee of yours.

Holiday entitlement during notice period

Employees can still request annual leave during their notice period, but it’s up to you as an employer to decide if they can take it. If you refuse, it must be for business reasons only, for example if they request a holiday during a particularly busy period.

You can also tell your employee to use up their annual leave within their notice and specify which dates to take it.

If the individual still has still got some of their statutory annual leave allowance left over on their leave date, you must pay them the equivalent within their final pay.

Read more about holiday entitlement during notice period.

Gross misconduct and notice period

In the case of gross misconduct, an employee will receive a summary dismissal that terminates their employment immediately. This means that they will not be allowed to work their notice period, and will only be entitled to payment for what they’ve already worked.

It’s a good idea to include a section on what constitutes gross misconduct and what the process will be for it in your employee handbook. This will help you to remain fair in each case and avoid claims of unfair dismissal.

Fixed term contracts and notice period

For employees on fixed term contracts, a notice period is not required as their leave date will already be set. However, if you choose to terminate the contract before the original expiry date, you must give the statutory notice required. The same goes for if the employee wants to end their fixed term contract early.

Employee not working full notice period?

If an employee doesn’t want to work their full notice period, consider coming to an agreement about letting them reduce the length of the notice. It would mean you wouldn’t have to pay them for as long, which may be beneficial to your business.

However, if you want them to work their full notice and they refuse, you cannot force them to work. Although they’ll technically be in breach of contract, taking them to court will likely be expensive and may not be worth it, so consider your next steps carefully. If you have an employee refusing to work their notice, it’s a good idea to seek professional advice.

As we have explored in this blog, notice periods work both ways for you and your employees. The notice period should be carefully considered when putting together a new starter’s contract. Notice periods are a key aspect of an employee’s terms & conditions, and can impact on the amount of time there will be for you to plan ahead and do a handover if an employee resigns.

The content of this blog is for general information only. Please don’t rely on it as legal or other professional advice as that is not what we intend. You can find more detail on this in our Terms of Website Use. If you require professional advice, please get in touch.

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If you need help with creating notice period clauses in employment contracts, or you’re not sure how much notice employees are entitled to receive, our HR consultants can help.

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