Is a contract notice period legally binding? Employment solicitor Toby Pochron explains what notice periods are and their legal ramifications for employers.
In a current period of increased employment fluidity, notice periods have become a hot topic for employers. This article aims to deal with the practicalities of what a notice period means for employers and how to tackle tricky notice period situations.
The short answer to this is that a period of notice is usually required in order to lawfully terminate a contract of employment. It is a period of time which occurs after either the employer or employee has notified the other party that they intend to terminate the employment.
The purpose of a notice period is twofold:
However, sometimes a notice period acts to get in the way of what each of the parties to the employment contract would want, ways to deal with these situations are detailed below.
There are elements that may dictate the length of a notice period:
The starting point is that under the Employment Rights Act 1996 (ERA) there is a minimum period of notice. The current statutory minimum is:
The statutory minimum will not always be the notice period employers have to use. Employers have discretion to set a period of notice they deem reasonable in their contracts of employment. This period of notice may be longer than the statutory minimum, especially in roles which need an individual who is senior, qualified, or skilled and it would then take longer to satisfactorily fill their position. Yet, employers should also be wary to not set excessively long notice periods as they may act to deter employees from taking the role.
Employers, while they have discretion, cannot set the notice period lower than the statutory minimum as the ERA effectively imports this minimum figure into the contract of employment. If an employer attempts to do this, the courts will not enforce it unless the parties have waived their rights to such notice, which is highly uncommon in practice.
If the contract of employment is not for a fixed term and it does not include provision for the period of notice, then there is an implied term to give reasonable notice. A Tribunal would not just imply the statutory minimum but would consider the facts of the case and determine what they believe a reasonable period of notice. Typically, courts would imply a longer period than statutory notice.
So long as a member of staff is classified as an employee, they will be entitled to a notice period regardless of the number of hours they work.
If the member of staff is a worker, then, while there is no legal obligation to provide a notice period, an employer can require one to ensure the employer gets that grace period to fill the role. Employers should be cautious to make sure that by providing their workers with a requirement to give notice they do not tip their workers into the realms of being an employee.
Yes, as there is a legal requirement to provide notice, the subsequent notice period is then legally binding. Failure to provide notice or serve the notice period could result in a breach of contract, which then provides the innocent party with a potential avenue to bring legal proceedings.
If the employee fails to comply with the requirements for a notice period, then the employer has the option to terminate the employment without any notice or any payment in lieu of notice.
Yes, just because an employee is working their notice period does not prevent a separate dismissal from occurring, brought about by either party. For example, if there is a summary dismissal in this time, perhaps due to gross misconduct, then there would be no requirement to provide any notice to the employee.
As previously covered, a notice period is legally binding; therefore, if an employee decides they do not want to work their notice period they would be in breach of their contract.
There are several ways to approach a situation like this:
If an employer has concerns over the potential damage an employee could do while working their notice period, then there are two routes which can be taken if provided for in the contract of employment:
Once valid notice has been given, it cannot be withdrawn by either party, it can only be shortened or extended by mutual consent. However, the employer can provide a second notice, which brings forward the date of termination.