What is the law on notice periods?

Notice periods—your decision or theirs?

There’s a lot to consider when someone leaves a job – on both sides. Your company might need to begin a recruitment process or deal with the rigmarole of restructuring. The employee will need time to consider their next steps, whether leaving is their decision or the company’s.

A clear, agreed employee notice period allows time for those next steps to take shape.

When an employee is leaving…what must you do?

It’s good practice for your company to specify notice periods in individual employees’ contracts. This way, there’s no doubt from either side about what notice period is effective. It also allows for better planning and gives your company more control over the situation.

If a member of staff gives notice, you must accept their resignation and agree in writing their last day of work (and when employment formally ends, if it’s a different date).

What are an employee’s rights if dismissed?

Even if there is no written contract, all employees must be given at least ‘reasonable’ notice when employment is ended.

There are very few exceptions. Employees with no right to a notice period include:

  1. Staff employed for less than a month
  2. Crown servants
  3. Staff dismissed because of gross misconduct

Length of employee notice periods

The legal minimum notice period is one week for every year worked at your company (up to a maximum of 12 weeks).

Reasonable notice is often interpreted as ‘one pay period’ – so one week if the employee is paid weekly, or one month if they’re paid monthly.

Contractual notice is whatever is specified in the employee’s contract. It can’t be less than the legal minimum, and should fit with your company’s overall culture.

Do employees have to work their notice period?

PILON

PILON stands for ‘Pay in lieu of notice’, and it can be applied at an employer’s discretion. An employee can be paid for their notice period – or part of it – instead of working. It’s also called ‘severance pay’.

For example:

Joanna is entitled to four weeks’ notice. Her company has changed and no longer has work for her to do, so she only receives one week of notice to tie up loose ends. For the remaining three weeks, she is paid but doesn’t need to attend her workplace.

When an employee receives PILON, they are not usually entitled to holiday days for the notice period. They do, however, continue to receive any company benefits specified in their contract.

Garden leave

Alternatively, an employee may be asked not to attend work at all during their notice period. This is known as ‘garden leave’. During this time, the employee would be paid, and should not take up any new work.

For your company, the main benefit of garden leave is to prevent contact between the ex-staff member and your clients, customers and other contacts. It’s also a way of preventing that person from accessing company files or confidential information.

However, you can still call upon the employee to carry out specific tasks if their skills or knowledge are needed.


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