When thinking about what length of notice to include in contracts of employment there are a number of factors to consider. Firstly, it’s important to know what the law says, as outlined in the Employment Rights Act (1996).
From Employer to Employee
After one months’ continuous service, the employee is entitled to one weeks’ notice until they have been employed for 2 years after which they are entitled to receive a weeks’ notice for each complete year of service. As follows:-
|Period of continuous employment (in years)||Minimum period of notice (in weeks)|
|Less than 2 (but at least one month)||1|
|At least 2 but less than 3||2|
|At least 3 but less than 4||3|
|At least 4 but less than 5||4|
|At least 5 but less than 6||5|
|At least 6 but less than 7||6|
|At least 7 but less than 8||7|
|At least 8 but less than 9||8|
|At least 9 but less than 10||9|
|At least 10 but less than 11||10|
|At least 11 but less than 12||11|
|More than 12||12|
From Employee to Employer
From a statutory point of view, employees giving notice are only required to give one weeks’ notice after being continuously employed for a month.
This does not rise with service and it can be served either verbally or in writing.
The above therefore causes an imbalance and, depending on the circumstances, can work against or in favour of the employer. This is when we need to think about what notice to put in the contract of employment, i.e. what the contractual notice period should be.
Contractual notice can only enhance what is already covered by the law, is legally binding (as long as it is fair and reasonable!) and aims to ensure both parties have increased protection.
How much notice to ask for?
So how much notice to leave is really required from your employees; and how much do you really want to give if you are the one telling them to leave, for example in a redundancy, poor performance, capability or repeated misconduct situation?
To decide this, we must think about on the impact on the business to replace the employee who has chosen to leave or perhaps when you have ‘chosen’ for them.
- Causes – Make a list of all scenarios you can think of under which an employee would give or be given notice to leave their employment (excluding summary dismissal when they are dismissed without notice) and decide what’s best in that situation.
- Costs – Can you afford to pay enhanced notice and cover benefits that continue to accrue during notice? What about in a redundancy, poor performance or capability situation when you either don’t want the employment to continue or the person isn’t actually able to work during their notice?
- Consequences – Ask yourself, how easy would it be to fill the role? How long would it take and can the work be covered whilst this is happening?
- Recruitment – How will increased notice periods affect recruitment into certain roles? Will your potential new starters into different roles want more security and commitment from you or will they want to know they can leave relatively quickly?
What do other businesses do?
- Typically, notice periods increase with seniority.
- One third set their most senior appointment notice periods at six months following probation.
- Below senior level, organisations tend to set three months for managers; and one month for roles below this.
- Whilst most employers increase notice with seniority some also increase for roles that are hard to fill or are otherwise “key” to the organisation
- All organisations try to balance what is fair for the employee in a senior role with what is reasonable for the organisation in terms of recruiting replacements and having a timely handover.
- Most utilise statutory notice only during probation.
- Shortening or disregarding notice altogether by agreement between the parties is often used as a bargaining point to reach mutually satisfactory outcomes, depending on circumstances.