A notice period is the stipulated amount of time that an employer demands between the notification of an employee’s departure or dismissal and their last day of work .
A notice period should be exercised by both employer and employee. An employee must notify an employer before the resignation, and an employer must notify an employee before terminating employment.
What is a notice period?
A notice period means something different depending on who submits the notice.
A notice period begins once the employer submits their letter of resignation, and it ends on the last day of work. It’s a standard requirement that employees give the company a set period of time to prepare before they leave.
In the alternate instance, the notice period begins on the day that an employer gives notice of termination to the employee.
There are two main types of notice periods, namely, a contractual notice period and a statutory notice period.
Contractual notice period
A contractual notice period is stipulated in an employee’s employment contract. While the amount of notice needed may differ from another, it can’t be less than the legal minimum notice period. In addition, it should fit within the overall company culture.
Statutory notice period
Also known as a legal notice period, a statutory notice period is a minimum notice a current employer can give to departing staff. The employee’s notice period is guided by the length of time that an employee has been working for the company. Local employment laws govern the best approach too, for example, employment in the US is often at-will, and therefore no notice period is required. In practice, most employees provide two weeks' notice.
Consider the following as a guideline.
- Employed for one month to two years — minimum one week’s notice
- Employed for two years to 12 years — one week’s notice for every year
- Employed for 12 years or more — 12 weeks of notice
The specifics of a statutory notice period will depend on the local employment law. When building a remote team and hiring international job seekers, it’s important to consider the length of your notice period and how local laws have an impact. These details should be stipulated in the international employment contract.
Importance of a notice period
The notice period serves the important role of managing expectations and workflows. For example, it enables the HR team to find an appropriate candidate to fill the role of an employee who resigns. It also allows departing employees to prepare for the next step in their career or search for a new job.
Establishing a notice period policy benefits both employees and the company as a whole. It makes the HR manager’s job a lot easier, while also contributing to communication flow, transparency, and trust.
Consider the following benefits of a clear notice period.
- Continuous productivity in the workplace
- High morale through a shared understanding
- Healthy employer-employee relationships
- Positive employee reputation by acting with respect and courtesy, parting ways on good terms
Tips for implementing an effective notice period system
The notice period plays a role in nurturing the company culture and ensuring that there is no bad blood in the workplace leading up to the employer’s final day.
- Establish an employment contract that explains the notice period policy in simple language
- Offer incentives, such as severance pay or a discretionary bonus, to encourage employees to follow the notice period
- Conduct regular performance reviews to document unsatisfactory employment behavior
- Train human resources managers to communicate effectively and address any problems head-on
- Practice goodwill during the notice period to ensure that you part on good terms
Adaptations to the traditional notice period
There are also specific instances when the notice period is impacted by external events.
Gross misconduct and the notice period
In the instance of gross misconduct, such as acts of harassment or possession or supply of illicit drugs, then an employer may issue an employee with a summary dismissal outlining immediate employment termination. In this instance, employment ends with instant dismissal.
There is no need to work on their notice period and employees will only be paid for the work done. These exceptions should be outlined in the employee contract and employee handbook to ensure fairness from the moment that an employee fills a new role.
Notice pay period
Sometimes it may be uncomfortable or impractical for an employee to work out the contracted notice period, in which case there are a few alternatives.
- Garden leave whereby the employee is contracted to their notice period and receives compensation but doesn’t need to carry out their duties
- Pay in lieu of notice (PILON) which is similar to garden leave, however the contract ends as soon as notice is given and the employee ceases to be affiliated with the company
Holiday entitlement during the notice period
Employees may request time off during their notice period, and the decision rests on the shoulders of the employer. It’s advised that any denial is based on business reasons, such as a busy business period.
Alternatively, you can tell your employee to use up their annual leave within their notice period, and specify specific dates. If the employee decides not to take leave, then the employer must pay the equivalent with their final pay on their last working day, regardless of whether their dismissal is on the grounds of redundancy or for another reason.