Termination of employment contracts

If you or your employer wants to terminate your employment, your employment contract will usually set out how much notice one must give the other before you leave. This may be more generous than the minimum notice period required to be given by law. Your employment contract cannot provide that you get less than the legal minimum notice.

Minimum notice periods for employees

Most employees have the right to a minimum amount of notice. This is:

• one week if period of continuous employment is between one month and two years;
• one week for each year of continuous employment between two and 12 years;
• 12 weeks if period of continuous employment is 12 years or more.

Reasonable notice

If your employment contract (whether written, spoken or through custom and practice) does not specify a notice period, a “reasonable” period of notice must be given – what is reasonable will depend on various factors including your seniority within the business and your length of service. It could also be determined by your pay period: if you are paid weekly, you could argue that a week’s notice is reasonable; and if you are paid monthly, you could argue that a month is reasonable.

Workers with no legal entitlement to minimum notice

Some workers have no legal right to a minimum period of notice. Most, however, are still entitled to reasonable notice as detailed above. They are:

• Those employed for less than one month by their employer.
• Non-employees, such as an independent contractor or freelance agent.
• Crown servants.
• Seamen employed on a ship registered in the UK under a crew agreement
• Employees dismissed for gross misconduct (these are not entitled to even reasonable notice).

Notice periods for employers

If you want to leave your job you will have to give your employer the amount of notice specified in your employment contract. The contract will specify whether it should be written and/or when you should give it. If the contract is silent on the matter, if you have worked for one month or more, the minimum notice you should give is one week. If you have worked for less than one month, the notice period should be reasonable.

Rights during notice period

Your employer is obliged to pay you your normal pay if you work your normal working hours in your notice period. You should also be entitled to all your normal benefits specified in your contract, such as a company car.

If you don’t work because you were on holiday; off sick; on maternity/ paternity/adoption leave; or you were willing to work but there was no work to do, you should still get your normal pay.

You are not entitled to a minimum pay rate during your notice period if you are working a notice period that is longer than the minimum notice period by a week or longer; or you take part in strike action after giving notice. You will also not usually be entitled to the minimum pay rate for any time off that you ask for during your notice period unless it is for a protected activity such as to look for work or arrange training if you are facing redundancy; for union duties; or for antenatal care

Pay in lieu of notice

Unless you have been fired for gross misconduct, if you are dismissed by your employer and you are not given the notice you are entitled to, your employer should pay you in lieu (instead of) of notice (this is also known as severance pay). The amount of severance pay you get may be stated in your employment contract, otherwise it will depend on what your normal pay is and the length of notice you are entitled to (ie, if you were entitled to four week’s notice but were only given one, you are entitled to the three weeks’ difference in severance pay). If it is not given to you automatically, you should ask for payment in lieu of notice from your employer in writing.

If the pay in lieu of notice is a contractual entitlement, you’ll probably have to pay tax and National Insurance on it. However if the payment is an ex-gratia payment or is actually compensation in lieu of damages then the first £30,000 will be exempted.

Failure to give proper notice

If either you or your employer doesn't give the correct notice, this constitutes a breach of contract. This can happen, for example, if contractually notice should have been given in writing and it was only given verbally; or no notice or not enough notice was given.

If you lose out financially because your employer hasn’t given you enough notice, you can pursue a claim for damages through the civil courts or the employment tribunal system.

If you leave your job without giving proper notice, your employer may try to refuse to pay you some or all of the money owed to you (which would include wages earned before you left plus any pay for untaken statutory holiday). However, they are not allowed to do this unless your employment contract specifically authorises it. If you don’t give enough notice and this causes the employer financial loss though (eg, extra cost for hiring temp staff to do your job or loss of revenue) they may pursue a claim for damages through the civil courts.

You can, of course, agree between you and your employer a shorter notice period, whereby you leave your job on the agreed date and will only be paid for the agreed period.

Ending a fixed term contract

A fixed-term contract normally ends automatically at its completion date and there is no need for the employer to give notice. The decision not to renew your contract however, is still a form of dismissal and your employer must still act fairly, otherwise you can make a claim of unfair dismissal. You have the right to:

• not be unfairly dismissed (following two year’s service);
• a written statement of reasons for the dismissal (after one year’s service);
• statutory redundancy pay (after two years' service).

Ending a fixed term contract early

If your employer ends the contract sooner than the agreed date it is a breach of contract, unless the contract specifies that notice can be given at any time during the contract. If a breach of contract is found, you may have a claim for damages for your outstanding pay and any benefits due in the remaining fixed period.

These rights also apply to apprentices, who are generally on fixed-term contracts. If you stay with the same employer after finishing your apprenticeship, your time as an apprentice will count when working out your statutory notice period.

Getting legal advice

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