The KashFlow Guide to Notice Periods

What is a notice period?

A notice period is the amount of time an employee has to give between handing in their resignation and actually leaving the company. This notice period also applies when an employer tells an employee their contract is being terminated.

As an employer, you have to make sure your employment contracts detail your policies on giving notice, including how much employees will be paid and what will happen if they leave to work for a competitor.

Minimum notice period UK

In the UK, the minimum notice period (also known as the statutory notice period) is a week if you have been in your job for between 1 month and 2 years.

If you’ve been in your job for between 2 and 12 years, you have to work 1 week’s notice for every year that you’ve worked. So if you’ve worked there for 5 years, you’d give a 5 week notice period.

This rule caps at 12 weeks. So if you’ve worked at the same company for 13, 19 or 25 years, you still only have to work 12 weeks’ notice.

Note that your notice period may be shorter if you are on your probation period.

Notice period for employees

If you’re looking to leave your current job and set up your own business, or you’re a freelancer or worker who wants to end one of your contracts of employment, then this section will be useful for you.

How to give notice

Your contract will tell you whether you need to give your notice in writing, or whether you can give it verbally. Note that if you have to give it in writing but only give your notice verbally, you may be in breach of contract.

If you think you’ll need to refer back, for example at an employment tribunal or even just for date confirmation, give written notice so that you have evidence.

How much notice do I need to give?

When working out how much notice to give employers, always check your contract. Many companies request a month’s notice period.

Usually, your notice period starts on the day you hand your notice in, though you should always confirm your end date.

What am I entitled to during my notice period?

When you’re on your notice period, you’re entitled to the same contractual benefits as normal. You’re also entitled to your regular pay – even if you’re on sick leave, holiday or parental leave when you hand your notice in.

How happens if I don’t give enough notice?

If you don’t give enough notice before leaving, you could be in breach of contract. As a result, your employer could take you to court and sue you for damages. These damages could be to cover the financial loss caused by lost revenue, or to cover the cost of hiring temporary staff to cover you.

What if I want to shorten my notice period?

You might be able to shorten your notice period if your employer agrees. One way to do so is to use any remaining holiday, so that you’re still paid but don’t have to go to work.

There are other scenarios in which you can shorten your notice period. If your employer has breached you contract, you can terminate it and leave without notice.

If your employer gives you notice of dismissal, you can give counter-notice and leave at an earlier date.

Notice period for employers

There may be occasions when you need to let members of staff go. Whatever the circumstances of this contract termination, it’s important to treat your employees with respect. Be fair with notice periods, pay and be understanding of their emotions during this time. How you handle the termination of an employee’s contract can affect your reputation as an employer, so make sure you’re doing your best.

How much notice you have to give

You have to give your employees the legal minimum notice:

• 1 week for employees who’ve worked for you between 1 month and 2 years.
• 1 week for every year they’ve worked for you, up to 12 weeks in total.

You may give your employees more notice than this if you want to. The notice period needs to be included in the employment contract, and should be one of the main terms and conditions of employment.

You should give the notice of termination in writing and specify relevant dates. Normal notice periods, and pay, apply even if your employees are being made redundant.

Dismissal

Sometimes, you may have to dismiss your employees without notice. This is called summary dismissal, and should only be used for gross misconduct.

The definition of gross misconduct can include theft, violence, fraud or other serious crimes. As an employer, you should thoroughly investigate these circumstances before you dismiss an employee.

Dismissal should be a last resort, as many situations can be resolved through communication or (where necessary) disciplinary action. You may find the Acas guide to discipline and grievances useful in these instances.

Should dismissal be the only option, make sure you have conducted all necessary investigations and use a fair procedure for the dismissal.

What happens if you don’t give you employees enough notice?

If you don’t give your employees a long enough notice period, then they may pursue legal action through an employment tribunal.

This is often a last resort. It’s in your best interests to resolve the issue informally. If you can’t do so, your employee may take a formal approach with a grievance procedure.

The final step before employment tribunal is the Advisory, Conciliation and Arbitration Service (ACAS). They will offer you and your employee a chance to settle your dispute without going to court.

Alternative notice periods

Once you have resigned or your contract has been terminated, you will be on your notice period. The above examples covered a standard notice period, in which you work until your leaving date. Below are alternative forms of notice period you may encounter.

What does payment in lieu of notice mean?

If you are offered payment in lieu of notice (also known as PILON), then you may be allowed or asked to leave as soon as you hand your notice in. You’ll still receive all your due pay, but it’ll come as an immediate one-off payment. So for example, you’d get a month’s pay instead of working a month’s notice.

Your payment should also cover holiday entitlement, commission and also compensate for a loss of benefits.

Your employer can only offer you payment in lieu of notice if is in your contract or if you agree to it. If neither of those apply, then you can work your full notice period.

What is garden leave?

If you are offered garden leave, then you’ll be asked to stay at home for the duration of your notice period. You’ll still technically be employed, so you’ll be paid as normal and get the same contract benefits. You won’t, however, be able to start work anywhere else.

During garden leave, you may still be asked to come into work to help with handover or other issues.

What are restrictive covenants?

Restrictive covenants are clauses in your employment contract that state you can’t work for competitors or communicate with customer for a set length of time after you leave the business.

The aim is to prevent you from competing with your former employer, either working for a competitor or setting up a rival business. Restrictive covenants may also prevent you from working with customers of your former employer by using knowledge of those customers gained during your employment.

Why offer these alternative notice periods?

As an employer, you may want to offer garden leave, payment in lieu of notice or restrictive covenants to protect your business interests. These are useful if one of your employees goes to work for a direct competitor or sets up a rival business, for example.

Their aim is to prevent them from taking sensitive business information, such as plans for the year ahead, or customer contacts to their next job.

Worried about how you’re handling your employees?

Being an employer can be tricky business, with a lot of legislation to keep track of. But KashFlow HR keeps compliance easy.

By uploading your employee’s paperwork and keeping documents safe in the cloud, you’re introducing a secure way to store and access employee data. With the cloud, there’s no confusion around start or end dates if your system crashes – as you can pull your files onto any device.

As KashFlow HR offers employee self-service, both you and your employees can check in on their files and employment status whenever they need to – making sure you’re both on the same page throughout the notice period.

KashFlow HR also offers a full record of holidays, sick leave and other absences so that when the time comes for you to calculate the amount your employees are owed – you have a full and comprehensive record of their time at the company.

Fancy giving it a go? Start a free trial here, or arrange a free demo here.