A notice period is the amount of time an employee must give to the employer before the contract can be terminated. Similarly, an employer must give the employee a notice period before an employee can be definitively dismissed.
When does a notice period start?
The notice period starts when either one of the two parties involved notifies the other that they intend to terminate the professional relationship.
How long should a notice period be?
There is not generally a rule how long a notice period should be except it should be at least as much as the statutory minimum. When an employee has worked for an employer between 1 month and 2 years, she is entitled to 1 week notice. The employee gets an additional week for each year worked up to a maximum of 12 weeks between the second and twelfth year of employment. Generally, a notice period should be long enough to allow the employer to find a replacement and allow the employee to find an alternative job. At the same time, a notice period should not be excessively long in order to allow for a more flexible work relationship.
What happens during the notice period?
The employee may choose to work during the notice period (e.g. training the replacement). Another option is the payment in lieu of notice (PILON) which results in the early termination of the contract in exchange for a financial incentive. The PILON must be at least as much as the employee’s salary during the notice period.
Employee applying for another job
An employee may choose to apply for another job while being employed elsewhere. The employee would need to communicate to the potential employer the end of their notice period as in order to start the new job the employee needs to terminate her current job
Employee leaving for a competitor
The employee may go working for a competitor. However, as said above the employee would need to terminate her current job before being able to switch. For this reason, the employer would generally retain any intellectual property or work done by the employee during the notice period.
Notice period and redundancy pay
When calculating redundancy pay, the employer needs to know the amount of full years the employee worked for her. It is important to note that such a number will be calculated using the last day of work of the employee before being made redundant and not when the notice period starts. If the employer is paying in lieu of notice, the employer will need to calculate what would have been the employee’s last day by working out her statutory notice period and use that date to calculate the number of full years the employee worked at the business entity. You can use our online redundancy pay calculator and/or download the excel version of such a calculator.