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:

  • Staff employed for less than a month
  • Crown servants
  • 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.

Frequently Asked Questions about Notice Periods

Our clients ask loads of questions about notice periods, so we’ve answered some of the most common ones below.

Not found an answer to your question? Bright Lightning gives you the answer to thousands of employment questions in seconds.

Is a notice period legally binding?

Yes, you’re contractually obligated to provide a notice period. Legal action could be taken if either party refuses to provide the correct notice period.

However, employees can request a shorter notice period if necessary. This is allowed as long as both parties agree.

Alternatively, employers can offer pay in lieu of notice (PILON). This is a lump sum to cover all the wages an employee would have earned during the notice period. What happens if you don't work your notice?

It’s a breach of contract to not serve the correct notice period. Employers can bring legal action against staff that don’t work their notice.

Employers can sue for damages, if they’re able to show financial loss caused by the employee quitting early.

Conversely, people can bring legal action against employers that dismiss them without a proper notice period. This can result in employment tribunals and costly fines.

What is the statutory notice period?

The statutory notice period is the legal minimum amount of notice you can provide to departing staff.

The length of the statutory notice depends on how long they have worked for you. It’s one week for each year of service (up to twelve years).

Yes, the notice period can be any length, as long as it’s agreed in the employment contract.

Notice periods are commonly between one and three months, but can be longer than that for people in more senior roles.

How do you write a notice for work?

The notice of resignation is a simple letter that confirms your plans to leave a job.

A letter of resignation should include:

  • The date
  • The name of the person it’s addressed to
  • The title of the role you’re resigning from
  • The last day of employment (based on the employment contract and notice period)
  • Your full name and signature

You can include additional details such as a thank you to the employer, and details of the reason you’re leaving.

What is dismissal with notice?

A dismissal with notice is when you provide the correct notice period before terminating someone’s employment contract.

Most dismissal must include a notice period. The only times when you don’t need to provide notice are:

  • If you offer payment in lieu of notice (PILON) instead
  • In cases of summary dismissal
  • If the employee has been employed for less than a month

Do I have to give four weeks’ notice?

The notice period depends on how long someone has worked for a company, and whether a different notice period is specified in the employment contract.

If there’s no notice period specified in the contract, you should follow the statutory limits.

The statutory notice period for someone with between one month and up to two years’ continuous service is one week. After that, you add one week for every year of continuous service.

Employees might need to work a shorter notice period to allow them to start a new job. There’s no legal obligation to approve these requests, but you should consider whether it’s feasible to let them leave early.

How is payment in lieu of notice (PILON) worked out?

Payment in lieu of notice (PILON) allows you to terminate an employee without them needing to work their notice period.

To calculate PILON, work out any money the employee would’ve earned during their full notice period. This varies depending on whether they work fixed hours or not.

As well as wages, PILON should include any bonuses, regular overtime or pay for untaken holidays.

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