There is often a point during every employer’s career when it becomes necessary for them to terminate the contract of one of their employees. Of course, this is never a desirable prospect. After all, a business’s workforce is at the very centre of its daily operations and there’s typically a somewhat familial relationship existing between each member. Dismissal represents a distinct breakdown from a variety of perspectives, but it can likewise be in your best interest to motion it.
Saliently, when you do come to the definitive decision that one of your staff must part ways with the organisation, even if it’s for an unambiguously valid reason, it’s of vital importance that you follow the standardised fair and lawful dismissal process. Admittedly, the inherent procedure can be rather tricky to navigate. However, if you don’t fulfil your legal obligations as an employer, then consequences will naturally follow. Namely, costly tribunal claims made by your former employee.
Terminating a member of staff’s employment in a fair and legal manner commonly involves providing them with a statutory notice period. A notice period signifies an employee’s entitlement to know how long they can work for before their contract of employment comes to an end. This is a requirement in the UK because it both serves to protect the employee & employer alike. In the first instance, so that your employee has ample time to look for new employment, and so that you are afforded just as much time to transition for the latter. So that you can understand all the attached details, we’ve put together this quick guide to statutory notice periods for employers. By reading it, you’ll fully understand this integral aspect of employment law.
The Minimum Statutory Notice Period
The minimum statutory notice period you must give to an employee who you intend to dismiss is, foremostly, determined by how long they’ve worked for you. This entitlement comes from the Employment Rights Act (ERA) of 1996, which stipulates that the majority of workers are to be given a certain degree of notice before being forced to leave a business or other organisation. The defined amount of time, as in accordance with UK Law, is a minimum of:
- One week’s notice for those employed for between one month and two years.
- Two week’s notice for those employed for between two and twelve years, with an additional week for every added year of ongoing employment, up to a maximum of twelve weeks.
- Twelve weeks’ notice for those employed for twelve years or more.
For those who have only been employed by you for under a month, a statutory notice period does not apply. To give an example, if you were to dismiss an employee who had worked for you for five years, then you’d be required to provide them with five weeks’ notice before ultimately terminating their contract. Regardless of your reason for dismissing an employee, you need to give them a corresponding statutory notice period to remain legally compliant. The notice period begins on the day after that which it is given. Having said all of this, rare cases of summary dismissals do not demand you present such notice periods.
Contractual Notice Periods
The only time you do not have to conform to statutory notice period regulations – with the exception of summary dismissal cases – is if you have set out an enhanced notice period within your employee’s contractual terms of employment. This other type of notice period is what’s referred to as a contractual notice period.
Although, if it turns out that a contractual notice period falls below the minimum allowance of a statutory notice period, then the latter will take precedence over the former, essentially nullifying that section of the contract. If you did define a contractual notice period within an employee’s contract beforehand, and it has since become invalid, then it’s possible for you to change this specified notice period. When making contractual changes, always bear in mind that you must acquire your employee’s consent first. If there is no mutual agreement then the variation will, consequently, stand as unenforceable.
Pay during Notice Periods
As a general rule, you are required to continue paying an employee their regular wage during their notice period if they are working through it. By the same token, this further entitles them to have access to any extra employee benefits they’ve been receiving while they’ve been under your employment, including any accrued holiday leave.
Relatedly, if circumstances lead you to not wanting an employee to work during their notice period, you can make them a payment in lieu of notice (PILON). However, this can only be done if there is a PILON clause within their contracts A PILON effectively provides an employee with the notice period pay to which they are entitled, i.e., that which is based upon their normal rate of pay, as well as any additional benefits, but means they will not work during the notice period. PILONs are set out in contractual terms and so, again, there must be unilateral agreement. That is, you cannot force your employee to accept a PILON.
Gardening leave functions similarly to a PILON but is represented by a separate contractual clause. In principle, if an employee has agreed to gardening leave, then they should be asked not to work, nor start an alternative role, during their notice period.
Albeit, reiteratively, they do have the entitlement of receiving full pay, alongside any intrinsic contractual benefits, during this time. Essentially, gardening leave is akin to paid leave and has no influence on the length of the notice period. The employee will be on ‘standby’ and should be available in such a position for if it arises that their presence is required.
Fundamentally, gardening leave is a measure designed to protect employers from key employees exiting a business who may have a mind to exert a negative impact upon its success and reputation. For example, you might be inclined to offer gardening leave to an employee who will be joining an industry competitor in the near future.
If an Employee Refuses to Work their Notice
Evidently, it sometimes happens that an employee has either handed in their notice, or received one you’ve issued them, and they have thereafter refused to work over this statutory period. Obviously, there are very few options here, given that you can’t forcibly make your soon-to-be former employee work if they are determined not to.
The only recourse available for you in such a situation is to take legal action, that is, if you’re resolved to go so far. Reason being, that refusal to work puts the employee in breach of contract, which could result in substantial damage to your business, i.e., significant financial losses. Moreover, if one of your employees chooses to resign with immediate effect, then the same regulations apply. On the employee’s part, they are required to give you at least a week’s notice if they’ve been under your employment for more than a month.
On this matter, you, as an employer, are permitted to come to a mutual agreement with an employee if they wish to leave the organisation prematurely, wherein the statutory notice period will be waived. Followingly, you would not be legally obligated to provide them with any pay or benefits, though it’s possible for you to offer these provisions anyway.
Breach of Contract Claims
Just as an employee can find themselves in breach of contract by refusing to work during their notice period, you can also be in breach of contract if you do not handle the entire procedure lawfully. Specifically, if you fail to give your employee notice which is adequately suited to their length of service, or fail to provide them with the pay they are entitled to receive throughout this period, then you are open to the potential of facing a wrongful dismissal claim and an unlawful deduction of wages claim.
A wrongful dismissal claim can be brought about by the employee if they feel like you have terminated their employment contract in a way which suggests an unfair breach. This might refer to you not affording them the minimum statutory notice period, the aligning notice period as contained within the terms of their contract, or a PILON which you had both agreed to prior. Likewise, if you have denied the employee in question’s request to work through the notice period, and also do not account for this by giving payment in lieu, then this too is a satisfactory reason for them to exert a claim.
If there is a visible breach characterised thus, then the employee has the right to seek compensation for damages as a direct cause of it. As a prerequisite, they must possess proof of the breach alongside proof that they suffered consequent financial damage. If there is no discernible circumstantial financial loss, a filing for the claim may not be actioned.
Despite this, it’s noteworthy that if an employee’s claim is successful, the monetary amount they will be given generally equates to their standard rate of pay, relative to the length of the notice period they’re entitled to, so that the situation can be considered as wholly rectified. On the other hand, an employee can file a breach of contract claim in court, where the quantifiability of damages is uncapped. In the context of an employment tribunal, the maximum award for damages totals at £25,000. This should illustrate how integral it is for employers to adhere to lawful statutory notice period practice.
One instance where statutory notice period rules are excepted is if you have summarily dismissed an employee. Summary dismissal, or dismissal without notice, involves terminating a member of your organisation’s contract without a written notice or a PILON. An employer might want to apply a summary dismissal in cases of gross misconduct in the workplace. This includes if the employee has engaged in threats of violence, violence itself, business theft or fraud, misuse of the organisation’s property, or marked defiance.
It would usually be illegal to fire one of your employees in this outright way, but cases of gross misconduct typify extreme behaviour. Notwithstanding this, if you know of, or suspect that one of your employees has acted in such a manner which comprises a clear breach of contract, then you must possess fitting evidence and conduct a comprehensive investigation into the allegations, all while maintaining fair disciplinary procedure. If your basis for summary dismissal is erroneous, then an aforementioned wrongful dismissal claim may follow.
When the serious consequences of dismissing an employee unfairly & unlawfully are explicated, it can generate a lot of pressure for employers. Add to this, the various legal intricacies you are required to have a firm grasp on, lest your business’s reputation and health suffer. We at advo can provide assistance with all that is entailed when it comes to statutory notice periods, and then some. Our HR consultants have years of experience which has equipped them with the knowledge needed to help businesses like yours ensure compliance. If you’re interested in our services, then be sure to get in touch today. For related material, visit our news page that we regularly update with other relevant information.