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Navigating employee departures is a challenging aspect of running a business, and knowing what notice period they are entitled to can be confusing. Whether you’re dealing with resignations, redundancies or dismissals, understanding what a notice period is and how they work will help you to protect your business while maintaining fair treatment of employees.
In this employer notice period guide, we’ll cover how they work in detail, including the notice period meaning, when does a notice period start, the different types of notice and when they apply, and what entitlements employees have during this time.
Notice Period Meaning
A notice period is the amount of time an employee or employer must give before ending a contract of employment. This allows for a smooth transition, giving both parties time to prepare for the change. The specific time given can vary based on contractual agreements, legal requirements or company policies, and should be outlined in the employee’s contract. An employer may give notice to their employee, or vice versa.
In the broader context of the employee lifecycle, this period is a crucial phase ensuring that all necessary handovers, training and exit processes are properly handled. This helps to ensure that the next employee can take over as seamlessly as possible, minimising disruption to business operations and customer service.
What are the different types of notice period?
There are several different types of notice periods, each serving a different purpose. Understanding them and how they each apply depending on the employment contract, legal requirements and specific circumstances of the employee’s departure, can help to manage employee exits effectively.
Statutory notice
The statutory notice is the period required by law. In the UK, employees employed between one month and two years must be given at least one week’s notice. 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.
Contractual notice
A contractual notice period is defined specifically in an employee’s contract. It can be longer than the statutory requirement, supporting businesses recruiting for important roles or those that may take longer than average to fill. However, a contractual notice period cannot be shorter than the statutory minimum. Depending on the terms outlined in the contract, the employer notice period may be longer or shorter than what is required from an employee.
Immediate notice
Immediate notice is given when either the employee or employer decides to end the contact without notice. This is often the case in instances of gross misconduct or other serious issues, where an employee is asked to leave and forfeits any notice pay. In the UK, immediate notice can also be given to or by employees with less than one month’s service, before the statutory notice period kicks in.
Garden leave
Garden leave is when an employee is asked to serve their notice away from the workplace. It’s commonly used when an employer wants to protect sensitive information, prevent an employee from immediately joining a competitor, or in instances where the employee may cause damage to the company. The employee still receives their full pay during the period, but they aren’t required to attend or perform work.
Payment in lieu of notice (PILON)
Payment in lieu of notice (PILON) allows employers to terminate employment immediately by paying the employee the equivalent of what they would have earned during their notice period. This approach may be used to facilitate a quick exit while fulfilling contractual obligations.
When does a notice period start?
The start of the period typically depends on the circumstances of employment and dismissal, as well as the type of notice given. For instance, it could begin from the day an employee submits their resignation letter or when the employer delivers a termination notice. If notice is given in person, it usually starts immediately. However, if it's sent via email or post, it may start on the day the employee reads it.
What entitlements does an employee have during their notice period?
The employee’s entitlements during their notice will depend on the terms outlined in their contract, and the specifics of their exit. It’s important to review these terms to make sure you’re upholding employee rights. HR software can help keep track of these entitlements and manage them effectively.
Salary
During their notice, employees are entitled to their regular salary unless otherwise agreed, such as in the case of immediate termination due to gross misconduct. Any deductions or adjustments should be clearly communicated and aligned with the terms of the employment contract.
Annual leave
Employees can usually take any outstanding annual leave during their notice if agreed upon by the employer. If the leave isn’t taken, it may need to be paid as part of their final salary payment.
Sick leave
If an employee falls ill during their notice, they’re generally still entitled to statutory or contractual sick pay. However, this may depend on the terms of their contract and any relevant employer policies.
Employee benefits
Employee benefits, such as healthcare or pension contributions, usually continue throughout the notice unless specified otherwise in the employment contract or in the case of immediate dismissal.
Does an employee have to work their full notice period?
In some situations, an employee might not work the entire employer notice period. This could occur if both parties agree, if there are extenuating circumstances, or if the employer decides to pay in lieu of notice (PILON). It’s important to consider the potential impact on the business and the employee before making this decision.
In instances where it may not be suitable for the employee to continue attending the workplace, they may be placed on garden leave, and will receive their full pay during the notice. Similarly, dismissal following disciplinary action, particularly in cases of gross misconduct, the employee may be dismissed immediately. In this instance, there is no notice period to work, but they also won’t receive a salary.
Manage the complete employee lifecycle with PeopleHR
Understanding the meaning of a notice period is crucial for managing employee exits and ensuring compliance with UK employment laws. By familiarising yourself with the different options, and the circumstances in which they’re most suitable, you can minimise friction during employee transitions and offer the best solutions to keep your business running smoothly while maintaining your employee’s rights.
HR software can simplify this process by helping managers and HR professionals to keep track of notice periods and manage employee entitlements. This not only saves time but also helps to maintain consistency across your business, which can help to avoid legal issues such as claims of unfair dismissal.
To find out more about how PeopleHR can help you to manage the complete employee lifecycle, book a free demo or get in touch with us today and we’ll be happy to help.
