What do employers need to know about notice periods on the termination of employment? Ashok Kanani answers the top 10 questions that employers ask on notice periods.
1. What is the minimum amount of notice an employer has to give?
An employer must give one week’s statutory notice to an employee who has at least one month’s service, but less than two years’ service. This rises by one week for each additional completed year of service, up to a maximum of 12 weeks’ notice.
2. What if the contractual notice period is different?
The contract of employment can allow for greater notice, but the statutory minimum would apply where the contractual notice is less.
For example, an employee with six years’ service whose contract of employment states that the notice period is one month must be given the statutory notice of six weeks.
3. Is an employee bound by any statutory notice?
Yes, the statutory minimum is one week’s notice for employees who have been in employment for at least one month.
The statutory notice employees must give does not increase with length of service, but the employee is also bound by notice stated in the contract of employment, which can be more than one week.
4. In what circumstances can an employer make a payment in lieu of notice to end the employment sooner?
As long as the employment contract has a provision allowing for a payment in lieu of notice, the employer will be able to end the contract before the expiry of the notice period.
If there is no such provision, then the employer would be in breach of contract for making such a payment.
Employers need to be careful because their breach of the employment contract could make the restrictive covenants in the employment contract unenforceable.
5. What can an employer do if there is no provision for a payment in lieu of notice in the employment contract?
One option is to place the employee on a period of garden leave, if the contract of employment allows this. Garden leave is where the employee is bound by the terms of the employment contract and does not come into work during the notice period.
Another option is to agree with the employee an earlier termination date with a compensation payment.
There is no breach of contract if the employee agrees to accept a payment in lieu of notice and end the employment before the end of the notice period.
6. Does annual leave accrue during the notice period?
Yes. Employees will always continue to accrue the statutory minimum annual leave entitlement during the notice period.
Whether or not they accrue an additional contractual amount will depend on the terms of the employment contract.
How annual leave is treated during the notice period can also depend on custom and practice in the industry that the employer operates.
7. Can an employee insist on taking holidays during the notice period?
Yes, as long as the employee has accrued untaken leave and gives reasonable notice. The employer can refuse a request for annual leave for valid business reasons.
8. Can an employer force an employee to use up holiday during the notice period?
The Working Time Regulations allow employers to specify the dates on which an employee must take some, or even all, of their statutory annual leave. There may additionally be contractual provisions the employer can rely on.
The employer must give notice to the employee, which is at least double the number of leave days it wants the employee to take.
9. What can an employer do where the employee has taken more annual leave days than that accrued at the date of termination?
If there is an express provision within the contract of employment, the employer can claw back through a deduction from wages the additional leave days taken.
In Hill v Chappell, the Employment Appeal Tribunal prevented the employer from clawing back excess holidays taken on the termination of employment because there was no agreement allowing for this.
10. What should an employer be aware of when deciding to dismiss an employee without notice for reasons of misconduct?
An employee can always challenge an employer’s decision to dismiss without notice in an employment tribunal as a wrongful dismissal claim, for which, unlike an unfair dismissal claim, there is no required length of service.
In such a claim, the employee would seek to recover the pay for the notice period, and there is an added risk that, if the employee is successful in his or her claim, the restrictive covenants in the employment contract become unenforceable.
Therefore, employers should ensure that their decision to dismiss an employee without notice is properly made and will stand up to external scrutiny.