You have a fair bit of leeway when specifying employee notice periods in your contract terms — but as always, your contract terms must be in line with the law.
When dealing with notice periods, the most important law is the Employment Rights Act 1996. Here are the important details you should keep in mind when terminating a contract.
What are the minimum notice periods when terminating employment?
The law protects both the employer’s and the employee’s rights to a notice period when employment is terminated.
Minimum notice periods employers must provide to employees
Employees who’ve been with you for less than a month have no legal right to be given notice.
For everyone else, when terminating employment you must give an employee:
- At least one week’s notice if they’ve been with you continuously for less than two years
- At least one week’s notice for each year of continuous service, if they’ve been with you continuously for between two and 12 years
- At least 12 week’s notice if they’ve been with you continuously for more than 12 years
Minimum notice periods employees must give to employers
When an employee decides to leave your organisation, they are also legally obliged to give you notice — but the minimum period is much shorter. Employees who’ve been with you for a month or more must give at least one week’s notice.
You may wish to use the employment contract to specify longer notice periods for employees who resign from your organisation.
What if you or the employee fails to provide notice?
If you fail to give an employee the correct amount of notice, this could amount to breach of contract. The employee could then make a claim to an employment tribunal.
If an employee fails to give you the required notice before leaving their employment, the employee may be in breach of contract. Your duty to pay the employee for the notice period not worked is nullified.
Payment in lieu and the right to waive notice
The Employment Rights Act 1996 does not prevent you or your employees from waiving your rights to notice. The law allows for both parties to agree the employment relationship should be terminated immediately.
Alternatively, you may wish to offer payment in lieu of notice if you want an employee to leave immediately without working notice.
The right to make an instant or summary dismissal
You and your employees also both have the right to terminate the contract without notice, by reason of the conduct of the other party.
One scenario is an act of gross misconduct by the employee, which is serious enough to justify instant or summary dismissal. Examples might include violence, theft or fraud by the employee.
It is essential in such cases that you fully establish the facts and follow a disciplinary procedure that meets the Acas code of practice. Otherwise, an instant dismissal is likely to be considered unfair at an employment tribunal.