Notice Period

NOTICE AN EMPLOYEE MUST GIVE AN EMPLOYER

The statutory minimum amount of notice an employee you must give is one week when they have worked for their employer for one month or more.

If their contract requires them to give more notice than one week then they should give it.

NOTICE AN EMPLOYER MUST GIVE AN EMPLOYEE

Whatever the contract of employment says, an employer must give an employee at least the statutory minimum period of notice, which depends on how long they have worked for the employer:

•   one week if the employee has been continuously employed for between one month and two years
•   one week for each complete year (up to a maximum of 12) if they have been continuously employed for two or more years

So, for example, if an employee had six and a half years service, you will be entitled to six weeks notice.

FIXED TERM CONTRACTS

Fixed-term contracts automatically end (without notice) at their end date. If the employer wants them to end sooner then notice should be given to the employee.

RIGHTS DURING THE NOTICE PERIOD

Pay and benefits

During the employees notice period they will normally have the right to their pay and benefits (e.g. a company car), as set out in their contract of employment.

There is a ‘right to minimum pay during the notice period’ that means the employee receives their normal pay even when they are not in work and their contract does not say they will be paid.

If this right applies to an employee, it means that they get their normal pay during the notice period if they are:

•   off sick
•   on holiday
•   temporarily laid off
•   on maternity/paternity/adoption leave

Garden Leave

An employee may be given notice by their employer and be told to stay away from work during their notice period. This is called 'garden leave' and is often used to stop employees working for competitors for a period of time.

It's helpful to the employer because an employee in that situation is still covered by any contractual duties (e.g. a duty of confidentiality) until the end of the notice period. They can also be brought back to work if needed. The employee is entitled to your normal pay during garden leave.

What happens if proper notice is not given?

The duty to give notice is a part of the employment contract. If either the employee or the employer does not give the right notice then this will be a breach of contract. This can occur:

•   if the contract requires notice to be given in writing but it was only given verbally
•   if not enough notice (or none at all) is given.

If the employee is dismissed without notice or constructively dismissed

The employer has the right to dismiss an employee without notice (summary dismissal) if the employee committed gross misconduct. Similarly, the employee has the right to resign, with or without notice, when the employer is in serious breach of contract (constructive dismissal).

If an employee thinks the employer had no grounds for summary dismissal, they can bring an Employment Tribunal claim (Industrial Tribunal claim in Northern Ireland) for breach of contract. The employee can also consider a claim for unfair dismissal.

If the employee does not give proper notice to the employer

If the employee does not give proper notice, they will be in breach of contract and it is possible for the employer to sue the employee for damages (for example, if they had to pay extra to get a temp to cover the employees work).

If an employee wants to give less than proper notice, they should try and come to some agreement with the employer and if possible get this put in writing.

If the employer does not give the employee proper notice

An employee can choose to agree a shorter notice period if they wish, employment will finish at the agreed time and the employee will only be paid for the agreed period.

If the employee does not agree then the employer could be in breach of contract and the employee could take them to an Employment Tribunal.

More commonly, the employer will compensate the employee for not allowing them to work out their notice – this is called a ‘payment in lieu of notice’.

Payment in lieu of notice (PILON)

Pay in lieu of notice is money paid to an employee as an alternative to being given their full notice. It can either be set out in the contract as an option for the employer or it may simply be paid to cover any potential damages for breach of contract.

If there is a pay in lieu of notice clause in the employment contract, the amount given will normally be set out there. If not, it is up to the employee to agree an amount, sometimes the employee may be willing to accept a small amount if it is in their interests to leave early.

The amount paid will normally cover everything that would have been earned during the notice period. This will normally cover the basic pay and may include other things like commission, and compensation for the loss of benefits such as personal use of a company car or phone, or medical insurance.

The employer might instead decide to give the use of benefits like a company car for the notice period. If an employee does not think the amount their employer is offering covers what they would have earned, they can still consider making a breach of contract claim.

Is an employees notice pay taxable

If an employee works their notice, they will be taxed at the usual rate on the money they earn in their notice period.

PILON is only taxable if it's been provided for in the employment contract or is customary. Otherwise, it is not taxable unless the PILON together with redundancy and other compensation adds up to more than £30,000, in which case the excess over £30,000 is taxable at the usual rate.