Managing notice periods is a core function of the Human Resources department. In this post we will look at the process for giving notice and the legal requirements that employers and employees must comply with. We will also look at how to calculate notice periods and what information should be included in a letter of resignation.
A notice period is the minimum amount of time that an employee or employer needs to give before terminating a contract of employment. An employee must give notice if they decide to resign from their post. This period ensures that the company has time to prepare for their departure. This usually includes recruiting and training a replacement and managing the handover of duties. If you are unable to hire a new candidate before a resigning employee departs then the notice period gives you time to delegate their tasks to other colleagues.
Similarly, as an employer you must give notice if you decide to dismiss an employee or make them redundant (unless they choose to pay them in lieu of notice). If you fail to do so it could be classed as unfair dismissal and the employee could file a claim against you with an employment tribunal. The only exception to this is if you dismiss an employee due to gross misconduct (more on this below).
You should detail your company’s notice periods in your employee contracts of employment. If you chose not to define specific notice periods then you must comply with the statutory minimum period set by law.
When it comes to employees on full-time contracts, there are two types of notice period recognised by UK employment law: statutory and contractual notice periods. The statutory period establishes a minimum notice period that employers and employees must give when terminating an employment contract. However, most companies choose to define a longer period in an employee’s contract. This is usually set at a minimum of two weeks, although it depends on length of service and seniority.
In the case of fixed-term employees, contracts automatically terminate without notice at their end date. If the employer chooses to end a fixed-term contract before the end of the established employment period then they must also give notice.
Another type of notice period governed by law is garden leave. If you decide to put an employee on garden leave they must stop working for the duration of their notice period. Employers usually reserve this for more senior members of staff such as directors and other executives. You can also pay your employee in lieu of notice. In both cases, you must provide your employees with full pay and benefits.
Finally, according to UK law, employers are entitled to dismiss without notice in the case of gross misconduct. Reasons might include theft, gross negligence or serious misconduct. Employees also have the right to resign without notice if they believe their employer is in serious breach of contract (such as providing a hostile work environment). This is known as constructive dismissal and employees have the right to file an Industrial Tribunal claim for contract breach.
To calculate an employee’s notice period you need to take a number of aspects into account. Firstly, as we mentioned above, there is a statutory minimum notice period that you must offer your employees. Unless you have established a longer notice period in an employee’s contract, you need to comply with the statutory minimum notice periods:
- One week’s notice for any period of continuous employment between one month and two years
- One week of notice for each additional year of continuous employment (between two and 12 years)
- 12 weeks’ notice if employed continuously for 12 years or more.
This is the absolute minimum period you must comply with. However, most companies define a longer notice period. Longer notice periods benefit the employer as they have more time to find a replacement. They also benefit employees as they have increased job security. Companies that offer shorter notice periods tend to have higher rates of turnover for this reason.
Fixed-term employees have the right to a minimum notice period of 1 week if they’ve worked continuously for at least 1 month. If a fixed-term employee has worked continuously for over 2 years they are entitled to 1 week’s notice for each year worked.
Finally, your employees can take their annual leave during their notice period. They are also entitled to their standard company benefits (such as sick pay and other employment benefits). In all cases, you must pay your employees full pay until the last day of their notice period.
What happens with holiday entitlement?
Once an employee has handed in their letter of resignation, if they still have holiday left you must prorate this unused time off. This money should be added to employees’ salaries at the end of the month.
When an employee chooses to hand in their notice they must give you a resignation letter. This applies even if the matter has been discussed in person. There are a number of details that they must include in this letter:
- Name and date
- Contact information
- The position the employee is resigning from
- Reason for leaving
- When the resignation will take effect
- Their notice period and the last day they will work
- The intention to complete a handover (ideally)
It is important to clarify the process for resigning in your companies policies. That way employees will know what information they need to include in their resignation letter. This will then serve as written proof of notice and protects both parties in the event of potential future disputes.
The offboarding process
When employees leave, a lot of managers do not realise the importance of conducting a solid offboarding process. This is just as significant as the onboarding process, as it is an excellent opportunity for managers to receive honest feedback regarding ways the company could develop, as employees won’t be scared to say exactly how they feel as they will be leaving the company anyway.
Why not download our free offboarding checklist to make sure you are asking all the necessary questions.
Every time you offboard an employee, you need to hire a new one. Did you know Factorial’s applicant tracking software improves your recruiting process by helping you create career pages that attract more high caliber candidates.