With the ever-changing economic climate, employment continues to change with it. Today, people rarely stay with companies for a long period of their lives as compared to fifteen years ago. Some causes of this are the increase of competition to stay “an employer of choice” as employees have the advantage to choose from attractive employment packages as employers battle it out to attract the best talent.
All employment at some stage comes to an end whether by voluntary termination, dismissal or even redundancy. So, a question arises then on how you should calculate notice periods and pay. Here’s your quick guide to calculating notice periods and the risk and exceptions.
HOW MUCH NOTICE IS REQUIRED?
This is dependent on the length of service as well as the terms in an employment contract. Contracts may stipulate when an employee must provide notice before they depart from the company as well as notice provided by the employer before a termination. Not adhering to these notice periods is a breach of contractual terms.
However, calculating notice periods seems a hefty task particularly for businesses who have failed to provide a written statement of employment to all workers. Despite this, the law lays out the statutory minim notice periods that apply which can be used to calculate notice periods. This means that even in the absence of an employment contract, there are rules in calculating notice periods that all employers and employees should know. The following rights on notice periods are laid out in Section 86 of The Employment Rights Act 1996 and cites;
Service Length and Notice Required:
- Less than one month
- No notice period applies
- 1 month to 2 years
- At least 1 week’s notice
- 2 years to 12 years
- 1 week’s notice for each year
- 12 years plus
- Limited; capped at 12 weeks’ notice
A contract of employment may allow for extended notice periods – always check the contract before calculating notice periods and final pay to avoid claims of wrongful dismissal.
FIXED TERM CONTRACTS
In. a fixed term contract – such as an apprenticeship contract, a worker is expected to simply work until the end of the contact/agreed length of time with no need for either party to provide notice before arriving to the end of the agreement. However, there should always be a contact of employment in place to ensure transparency around ending the employment before the contract comes to an end.
Usually, workers should provide at least a week’s notice if they decide to end the contract earlier than the agreed fixed term. The employer should follow the above notice periods as above which are usually applied to permanent staff. Again, always check the contract of employment to ensure correct calculation of notice periods.
REMUNERATION DURING NOTICE PERIODS
Calculating notice periods is more than just the notification of intention to end the employment. All employees regardless of type of contract are entitled to their normal rate of pay during the entire notice period. You should assume that a notice period is worked, which means the employee still has to work as normal and therefore, be paid as normal during this period. In some cases, the employer may place the employee on “garden leave” which means the employee is asked not to attend work during the notice period and told no work should be carried out by the employee during this time, however, it still must be paid in full in line with the normal rate of pay.
PAYMENT IN LIEU OF NOTICE
To elaborate further on garden leave; this is when employers decide that there is no need for the employee to work their notice period and instructs that they leave immediately. Again, the contract of employment should refer to this as a possible outcome of any termination of employment to avoid dispute and breach on contract. Reasons an employer will instruct a garden leave may be to protect the businesses interest by keeping the employee away from the business, perhaps from fear that company data to can be jeopardised with risk that it may be leaked to a competitor.
Payment in lieu of notice literally means payment instead of notice, or in place of notice. In effect, this means paying the notice period without the requirement for the employee to work.
OTHER FACTORS TO CONSIDER WHEN CALCULATING NOTICE PERIODS
During the notice period, employees continue to accrue holidays and rights as usual, this means, any accrued and unused annual leave entitlement must be applied and paid in full as part of the final remuneration. The final pay will also include other forms of payment in addition to the usual baseline salary pay, such as commissions payments, if applicable.
CAN NOTICE PERIODS BE REDUCED OR EXTENDED?
If either party fails to provide the agreed notice periods then this is a breach of contract and a claim may be upheld and taken to The Employment Tribunal. However, it is not unusual for an employee to request a reduction of the notice period particularly if they have secured employment elsewhere and are negotiating an earlier start date. The employer does not have to grant this request, but if you do, then you do not have to pay the employee for the notice period. Always include specified terms within employment contracts to avoid dispute if such situations arise. An employer may also request the employee extends the notice which is usual in matters where a high-level manager has resigned, and the employer is finding it a difficult task to replace him/her. The employee does not need to accept, and the decision is solely theirs. HR Habitat recommends that any such agreements should be fully consulted, signed for and agreed by all parties before applying.
EXCEPTIONS TO STATUTORY NOTICE PERIODS
If the employer believes the employee has been involved in gross misconduct, then the employee would not be entitled to notice before a dismissal, or any payment for it.
Caution: gross misconduct are serious offences, and this acts/behaviour should be addressed through proper disciplinary processes to ensure lawful dismissal. Book a consultation or call 0330 133 5088 for expert lawful HR guidance on these matters.
Statutory notice periods exist to avoid issues that may arises after an employment relationship ends, such as the difficulty in recruiting for a replacement as well as providing employees time to look for alternative employment that otherwise would not have been possible if the employment came to an abrupt end. Having said this, currently, employees only accrue rights to make a claim of unfair dismissal if they have two years or more continuous service. To understand what this means or if you have any concerns about a termination call 0330 133 5088
