This month we consider the types of questions, issues and opportunities which might arise in relation to Employee Notice Periods. The content is applicable whether notice is provided by the employee via a resignation for example, or via the employer via dismissal or redundancy for example.
Below we look at some of the situations you might encounter, and explore options.
Employees should always be aware of the notice period they are required to give if resigning from their employment, and indeed how they are expected to go about it. Likewise, they should also have knowledge of the notice period they are entitled to, should the employer end their contract.
Notice periods to be given by both parties should be detailed within Terms and Conditions of Employment / Employment Contract, and any further information regarding process is generally detailed within a policy in the Employment Handbook.
Whilst notice entitlement is often detailed within formal correspondence when the termination is done by the employer (redundancy / dismissal etc), it is also important to formally confirm this when the employee resigns. By acknowledging receipt of an employee’s resignation in writing including detailing notice periods, not only does it provide them an element of closure, but it also avoids any discrepancies down the line around dates, or greyness should an employee wish to rescind their resignation.
Statutory notice is the minimum period that is required by law. In the UK, employees employed between one month and two years must be given at least one week’s notice on their employment ending. If employed for longer than two years, they must be given one week’s notice for each year of employment, up to a maximum of 12 weeks.
In terms of the statutory notice an employee must provide, if employees have worked for their employer for one month or more, the legal minimum amount of notice they must give is one week.
Often, an employment contract will set out a longer notice period. If it does, employees should give this length of notice to their employer.
The notice period can be greater if detailed and agreed within the employment contract, however it cannot be less than the statutory entitlement.
Generally the notice period required and / or given by the employer increases with the level of seniority associated with the role, or how critical they are to the successful operations of the Company. Required notice would also often increase with service length, that is after completion of the probation period, it may increase to one month, despite the fact that statutorily only one week is required. Employers should consider the length of notice they will offer, and indeed require when drafting their employment contracts.
Once an employee hands in their notice, they often want to leave as soon as possible, on occasion this may also suit the employer, but not always. Unfortunately this situation can be very frustrating for employers, and in actuality enforcement options can be limited, therefore often the best option involves an element of compromise.
At the very least, the employee leaving should try to reach agreement with their employer if they need to leave without working some or all of their notice (be that statutory or contractual). If someone leaves without agreeing it with their employer first, they could be in ‘breach of contract’. The employer may end up with extra costs if someone leaves before or during their notice without agreeing it, for example if they have to spend more to hire someone else on a short-term contract. In these situations the employer might be able to make a deduction from any final wages, if the contract allows for it, or make a court claim to get the money back from the person who left. However, employers should be mindful not to automatically withhold earned wages as this may lead to an unlawful deduction from wages claim.
Employers may accept that the best solution for both parties is to simply end the employment contract early and allow the employee to leave without working the notice. Or perhaps, you would prefer to offer a shorter notice period.
If employers do decide to allow the employee to leave without working their entire notice period, this should be confirmed in writing. This ends their employment contract and means they are not entitled to the remaining unworked part of their notice period. The employer only has to pay them for the time that they’ve worked (this includes any money owed for accrued but untaken holiday).
As noted above employers can agree a shorter notice period with the employee, if they request not to work their full notice period this should be confirmed in writing and they will only be entitled to be paid work hours / days worked.
However, should the employee not request a shorter notice but the employer, for various reasons does not want the employee to work their notice period, there are alternative options;
Garden leave is an option for many employers to keep employees away from the business during their notice period, with no expectation of them to work.
This option may be used if they are leaving to join a rival business. To protect sensitive business information or to prevent disruptions to the workplace. During garden leave an employee is technically still employed by the business and will continue to be in receipt of their full pay and benefits.
However, garden leave must be specified in the employee’s contract or agreed upon between the employer and employee. If the contract does not include a garden leave clause, the employer may not have the right to impose garden leave unilaterally.
Pay in lieu of notice (PILON) is a type of payment which is given instead of working.
You can decide to provide a PILON payment instead of asking employees to work through their notice. With this payment, the employee’s contract will end straight away. In essence, this is a way of paying someone to leave with immediate effect.
It’s important to note that you must make sure you have the contractual rights to pay in lieu of notice and that this agreement is put in writing.
In the UK, the notice period generally includes holidays, with employees continuing to accrue holiday entitlement and having the ability to take or be paid for holidays during this time. However, individual circumstances and employment contract details may affect this general principle.
However, just like during normal employment, the employer can be prescriptive around when employees take annual leave. Provided employers give employees reasonable notice (twice as much notice as the amount of time they are required to take) of the requirement, this can make up part of the notice period.
Following an employees’ resignation or employers termination of contract, if the employee can’t work because they’re sick, their pay might be impacted.
This can be a complicated area, however as a general rule, If the employees’ notice period is the same as statutory or less than a week more than statutory, they are entitled to receive full pay throughout their statutory notice despite being absent due to sickness or injury.
However, if their contractual notice period is longer than statutory by a week or more, they are entitled to the appropriate pay for the reason they’re off, for example, statutory sick pay (SSP). This sick pay will be their regular rate of pay for sick leave, (whether that is a statutory rate or contractual rate).
Summary Dismissal / Gross Misconduct – If an employees’ contract is terminated as a result of Gross misconduct, it can be done without giving notice. This is when an employee has done something that’s very serious or has very serious effects.
At a minimum, the employer must have followed a fair procedure.
When an employee is dismissed for gross misconduct, they leave immediately, do not have a notice period, do not get paid notice pay.
Note: There are some things the employer must still pay them for. These include any work they have not been paid for yet, any ‘accrued’ holiday entitlement – this means any holiday they have built up but not used by the date they leave, any expenses they are owed. The employer might also need to pay them for other work benefits, unless their contract says something different.
The below points may be particularly pertinent for employees in senior roles or those with access to confidential or financial information.
Restrictions & Security – Employers might also consider limiting access and therefore risk when an employee is working their notice. A determination should be made regarding whether it is appropriate for the employee to continue to work their notice and with the same access they would normally have. In these circumstances an adjustment to their access maybe made, they may have certain responsibilities removed or one of the above methods at Q) 4 may be implemented, such as Garden Leave.
Communication & Planning – Whilst an employee leaving the Company can often be disruptive, one of the priorities at this time should be to limit the impact on the remaining workforce and company generally. Therefore, intentional and transparent communication and planning can help to ensure clarity for all involved. Making sure all employees and stakeholders are clear on any changes or shifts in responsibility and priorities. The surrounding team often require reassurance regarding a replacement colleague, or allocation of the “unowned” workload. Communication and planning will not only protect the Company from a risk perspective, but also limit the wider impacts on teams / stakeholders.
If you need any support with managing or responding to notice period issues, do reach out to us.