Termination of Employment
If an employer wants to dismiss an employee, or an employee wants to leave his or her job, the correct notice period must be given to the other party. The length of the notice period should have been defined in the contract of employment.
Notice for employees
A worker’s contract of employment is likely to offer a notice period more generous than the basic minimum entitlement.
In the case where no notice period in specified in the contract, a period of notice which is deemed reasonable can be given, where reasonable depends on a number of factors pertaining to the employee’s time of employment at the company, such as age, length of service and conventional practices within the particular industry.
Whatever the circumstances, all employers are entitled to at least the statutory minimum notice period, which is dependent on the employee’s length of service to the company:
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Employee’s length of service
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Minimum notice period
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Less than a month
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No notice period
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One month to two years
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One week
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More than two years but less than twelve years
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One week's notice for each full year of service
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More than twelve years
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Twelve weeks' notice
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If the minimum notice is not given then the employee would have a claim for wrongful dismissal.
n.b. the following types of worker are not eligible for this minimum period of notice:
- those who have been employed with their currently employer for less than a month
- those who are not classed as employees, such as independent contractors and freelancers
- employees who have been dismissed due to gross misconduct
- crown servants
- seamen on ships registered in the UK under a crew agreement.
Instant Dismissal/pay in lieu of notice
It is often the case that when an employee is sacked, the company wants them to leave instantly rather than giving a notice period. In these situations the company can grant the employee pay in lieu of notice. Sometimes it is written explicitly into an employment that this option can be taken.
Payments in lieu of notice can be tax-paid or tax-free. If the payment in lieu of notice is obligatory or the option is taken to exercise a discretionary payment then the payment is taxable as earnings. A non-contractual payment in lieu will still be taxable where it is seen as an automatic response to the fact that the employee is not being given their notice period.
A payment is more likely to be seen as damages, and therefore not taxable, where the contact between the parties is silent, the settlement is individually negotiated and the payment is not referred to as a payment in lieu of notice
(see more in pay)
Wrongful dismissal
If notice is not given, then the dismissal of the employee may be termed wrongful on the basis that the employer has breached the terms of the contract of employment in failing to give notice.
Exceptions to this rule include where an employee is dismissed for gross misconduct or has a contractual entitlement to a payment in lieu. Any employee who has suffered a wrongful dismissal can launch a claim for damages in breach of contract for notice pay and benefits.
Notice for employers
As an employee wishing to sever ties with your current employer, you must give notice. The length of the notice period and the way you should give it should be set out in your employment contract.
During this period you should work as normal and should receive your normal pay. If you are willing to work but no work is made for you, the employer is still obliged to pay your wages for the remainder of the notice period. You should also receive all the normal benefits of your job, such as a courtesy car.
A minimum pay rate applies except in circumstances where the employee‘s notice period is a week or over longer than the statutory minimum. You will also lose your right to minimum pay if you go on strike after handing in your resignation.
Fixed term contracts
A fixed term contract will simply end when it expires, and so no notice is required to be given. However, in these situations the decision by the employer to not renew the contract counts as a type of dismissal and therefore unfair dismissal claims can still be made if the employer does not act fairly.
Fixed contracts cannot be ended early by the employer unless it is stated in the contract that this is permissible, otherwise they will have committed a breach of contract.
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