If either party to the employment contract wishes to terminate the employment relationship a period of notice to do so is usually required to be served. The statutory notice period is the minimum legal notice period required to be given before terminating the employment contract. The exception to this is where the employer terminates the contract due to the employees gross misconduct. This is known as a summary dismissal.
The employment contract may provide for a greater notice period to what is prescribed by statutory notice. The statutory notice period depends on the length of the employees continuous employment for the organisation.
Statutory notice is as follows:
- One week notice – where the employee has been continuously employed for more than one month but less than two years.
- Two weeks’ notice – where the employee has been continuously employed for longer than two years.
- Beyond two years, notice required by either party is an additional week’s notice for each full year of continuous employment up to a maximum of twelve weeks. Therefore, if an employee has been continuously employed for six years, they would be entitled to six weeks notice.
However, the contract of employment may prescribe a different notice period. It is advisable that notice periods in a contract are at least the equivalent of what the statutory notice would be.
Once notice had been served by either party, it is advisable to reserve the right for the employer to decide to place an employee on garden leave. Alternatively, the employer may wish to exercise the right to make a payment in lieu of notice (PILON). Where the employee is placed on garden leave, they remain an employee for the duration of the notice period, and so remain contractually bound by the terms and conditions of their contract. The only difference is that they are not required to perform any duties for the employer (or the garden leave clause may stipulate that the employer may require the employee to perform some of their duties or alternative duties). However, with a PILON, the employment relationship is ended straightaway, with the employer then making a payment equivalent to what the notice period would have been.
It is important to give proper consideration to the wording of either garden leave clauses or PILON clauses. So, for example, you could make it a term that in the event a garden leave clause being exercised, the employee will be deemed to have taken any accrued but untaken holiday. Likewise, the employer could specify conditions to the amount paid if exercising the right to make a PILON.
Our specialist employment team will be able to assist you in drafting notice clauses which provide you as the employer the various rights you may wish to exercise when the employment relationship is coming to an end.