Navigating the Statutory Notice Period: A Short Guide For UK Businesses

For growing business in the United Kingdom, understanding the intricacies of employment law is crucial. One of the fundamental aspects of ending an employment relationship is the “statutory notice period.” This legal framework provides a structured and fair transition for both the departing employee and the business. Getting it wrong could lead to legal disputes and financial consequences when needing to compensate the employee in question. This article provides an overview of the statutory notice period for HR managers of small businesses across the UK.

What is the statutory notice period?

The statutory notice period is the minimum amount of notice that an employer or employee must legally give to the other to end an employment contract. This is a right enshrined in the United Kingdom Employment Rights Act 1996 (see our article on employment law for more information). This right is designed to provide a reasonable time-frame for an employee to find alternative work, or for an employer to find a replacement. It’s important to distinguish this from a contractual notice period, which we will touch on later.

The statutory minimum notice period is a legal floor, not a ceiling. The actual notice period can be longer if specified in the employment contract, but it can never be shorter than the statutory or legal requirement.

Legal requirements for notice periods in the UK

The duration of the statutory period of notice an employer must give to an employee depends on their length of continuous service, as follows:

• One month to two years of service: at least one week’s notice. 

• Two to twelve years of service: one week’s notice for each complete year of service. 

• Twelve or more years of service: twelve weeks’ notice. 

When an employee resigns, the statutory notice period they must give is simpler: if they have been employed for one month or more, they must give at least one week’s notice.

This applies regardless of whether the worker is full-time, part-time, or a casual worker, as long as they are classified as an employee. For casual workers with irregular hours, it is prudent to seek legal advice to ensure the correct calculations are made.

Calculating an employee’s notice period

To calculate an employee’s statutory notice period, you must first determine their continuous length of service. For example, an employee who has worked for your business for five and a half years is entitled to five weeks’ notice from you. If that same employee resigns, they are only statutorily required to give one week’s notice, unless their contract stipulates a longer period.

Statutory vs. contractual notice periods

A common point of confusion is the difference between statutory and contractual notice periods. The statutory notice period is the minimum set by law. A contractual notice period is what is agreed upon and written into the employee’s employment contract.

If the contractual notice period is longer than the statutory minimum notice period, the contractual period will apply. For instance, a contract might state that both employer and employee must give one month’s notice, even if the employee has only been with the company for 18 months. This is legally permissible and common. However, a contract cannot state a notice period that is less than the minimum statutory notice period for terminating employment contracts.

Rights and obligations for employers and employees

During the notice period, the employment contract continues to be in effect. This means:

• The employee is expected to work their normal hours and perform their duties as usual. They are also entitled to their normal pay and all contractual benefits, such as pension contributions and holiday accrual. 

• The employer must continue to provide the employee with their regular work and pay. 

Failure to adhere to these obligations can result in a breach of contract.

Common scenarios and potential consequences

Resignation: An employee should provide notice as per their contract or the statutory minimum. If an employee leaves without giving the required notice, they are in breach of contract. While pursuing legal action for damages can be costly and time-consuming for a growing business, it is an option if the departure of the employee brings about significant financial loss.

Redundancy and dismissal: In cases of redundancy or dismissal (except for gross misconduct), you must provide the correct notice period. Failing to do so can lead to a claim of wrongful dismissal at an employment tribunal.

If both the employee and the employer don’t give notice: If there is a mutual agreement to waive the notice period, this is generally acceptable. However, if an employer dismisses an employee without notice and without a valid reason (such as gross misconduct), this is a breach of contract, and the employee can claim for payment in lieu of notice. If an employee leaves without notice, the employer could potentially sue for breach of contract.

Exceptions to the statutory notice period

There are specific situations where the statutory notice period does not apply:

• Gross misconduct: An employer can dismiss an employee without any notice if they have committed an act of gross misconduct, such as theft, violence, or a serious breach of health and safety rules. This is also known as a summary dismissal. 

• Payment in lieu of notice (PILON): If a clause exists in the employment contract, or if the employee agrees, an employer can terminate the employment immediately and make a payment to the employee for the notice period they would have worked. 

• Garden leave: An employer may ask an employee to not come into the workplace during their notice period, while still remaining on the payroll. This is often used to protect business interests and confidentiality when an employee is leaving to join a competitor. The employee continues to receive their full pay and benefits during this “garden” or “gardening” leave.

Understanding the nuances of the statutory notice period is a fundamental responsibility for any HR manager in the UK.

By ensuring your business complies with the statutory minimum notice period and clearly defines notice requirements in your employment contracts, you can manage the end of an employment relationship fairly and legally, protecting your business from potential disputes. However, always make sure you seek legal advice if you are unsure about a specific situation.