AA Legal Documents
Law guide

Notice and notice pay

Contents

Notice and notice pay

When you finish a job you should normally give or be given notice. Find out how much notice you or your employer must give, the rules on what payment you should receive and your other rights and responsibilities below.

Unless your contract says otherwise, notice can be given verbally or in writing, although it is advisable to at least confirm it in writing.

The amount of notice will normally be set out in your contract with your employer. If not, there's an implied term that you should give a reasonable period of notice. What's 'reasonable' will depend on your seniority and how long you've worked there.

If you are an 'employee', there are statutory notice periods that are also treated as a part of the contract (see below). For more information, see our 'Employees, workers and the self-employed' section.

Statutory notice periods

Notice you must give your employer

The statutory minimum amount of notice you must give is one week when you've worked for your employer for one month or more. If your contract requires you to give more notice than one week then you should give it.

Notice your employer must give you

Whatever your contract says, your employer must give you at least the statutory minimum period of notice, which depends on how long you've worked for them:

• One week if you've been continuously employed for between one month and two years

• One week for each complete year (up to a maximum of 12) if you've been continuously employed for two or more years

So, for example, if you've had six and a half years' service, you will be entitled to six weeks' notice.

Fixed-term contracts

Fixed-term contracts automatically end (without notice) at their end date. If the employer wants them to end sooner then notice should be given to the employee.

Rights during the Notice period

Pay and benefits

During your notice period you will normally have the right to your pay and benefits (e.g. a company car), as set out in your contract of employment.

There is a 'right to minimum pay during the notice period' that means you get your normal pay even when you aren't in work and your contract doesn't say you'll be paid. If this right applies to you, it means that you get your normal pay during the notice period if you are:

  • Off sick
  • On holiday
  • Temporarily laid off
  • On maternity/paternity/adoption leave
Garden leave

You may be given notice by your employer and be told to stay away from work during your notice period. This is called 'garden leave' and is often used to stop employees working for competitors for a period of time.

It's helpful to your employer because an employee in that situation is still covered by any contractual duties (e.g. a duty of confidentiality) until the end of the notice period. They can also be brought back to work if needed. You are entitled to your normal pay during garden leave.

What happens if proper notice isn't given?

The duty to give notice is a part of your contract. If either you or your employer doesn't give the right notice then this will be a breach of contract. This can occur:

  • If the contract requires notice to be given in writing, but it was only given verbally
  • If not enough notice (or none at all) is given
Dismissal without notice or constructive dismissal

Your employer has the right to dismiss you without notice (summary dismissal) if you've committed gross misconduct. Similarly, you have the right to resign, with or without notice, when your employer is in serious breach of contract (constructive dismissal).

If you think your employer had no grounds for summary dismissal, you can bring an Industrial Tribunal claim for breach of contract. You can also consider a claim for unfair dismissal.

If you don't give proper notice to your employer

If you don't give proper notice, you will be in breach of contract and it is possible for your employer to sue you for damages (for example, if they had to pay extra to get a temp to cover your work).

If you want to give less than proper notice, try and come to some agreement with your employer and, if possible, get this put in writing.

If your employer doesn't give you proper notice

You can choose to agree a shorter notice period if you wish, your employment will finish at the agreed time and you will only be paid for the agreed period. If you don't agree, your employer could be in breach of contract and you could take them to an Industrial Tribunal.

More commonly, your employer will compensate you for not allowing you to work out your notice – this is called a 'payment in lieu of notice'.

Payment in lieu of notice (PILON)

Pay in lieu of notice is money paid to you as an alternative to being given your full notice. It can either be set out in the contract as an option for your employer or it may simply be paid to cover any potential damages for breach of contract.

If there is a pay in lieu of notice clause in your contract, the amount you will get will normally be set out there. If not, it is up to you to agree an amount, sometimes you may be willing to accept a small amount if it is in your interests to leave early.

The amount you will get will normally cover everything that you would have earned during your notice period. This will normally cover your basic pay and may include other things like commission, and compensation for the loss of benefits such as personal use of a company car or phone, or medical insurance.

Your employer might instead decide to give you the use of benefits like a company car for the notice period. If you don't think the amount your employer is offering covers what you would have earned, you can still consider making a breach of contract claim.

Insolvent employers

It may be that your employer wants to end your employment but can't compensate you because they're insolvent. See our section, 'If your employer becomes insolvent' for more information.

Is your notice pay taxable?

If you work your notice, you'll be taxed at the usual rate on the money you earn in your notice period.

PILON is only taxable if it's been provided for in your contract or is customary. Otherwise, it is not taxable unless the PILON together with redundancy and other compensation adds up to more than £30,000, in which case, the excess over £30,000 is taxable at the usual rate.

What to do next

If you haven't been given proper notice (for example, if you're told that your employment is to end straight away), you should ask for PILON. Put your request in writing, or at least confirm any phone calls you make in writing. If you have at least one year's service, you could also ask your employer for written reasons for your dismissal.

You should normally put in a written complaint to your employer and give them a chance to sort the problem out before making a breach of contract claim.