Notice Periods

Most people will work many jobs throughout their lives. Moving jobs can be a stressful time so it’s important to give your employee time to adjust to this change.

Notice periods should be clearly outlined in your employee’s contracts or you could face legal action, such as employment tribunals and costly fines.

In this guide, we’ll explain what a notice period is, what the legal amount of notice is, and the difference between each type.

What is a notice period?

A notice period is the amount of time your employee must work for you after they resign, are dismissed, or are made redundant.

The notice period:

• starts the day after the employer tells the employee that they want to end the employment

• ends on the last day of employment.

And depends on:

• How long they’ve worked for you

• What it states in their contract

• If they’ve been dismissed, made redundant, or resigned

Minimum notice periods

• 1 year or less: 1 week

• More than 1 year – 3 years: 2 weeks

• More than 3 years – 5 years: 3 weeks

• More than 5 years: 4 weeks

• An employee must get an extra week of notice if they’re over 45 years old and have worked for the employer for at least 2 years.

You can use the Fair Work Notice and Redundancy Calculator to work out how much notice you need to give your employees.

There are two types of notice periods: statutory and contractual.

Contractual vs statutory notice periods

There are two main types of notice periods that you should keep in mind.

Contractual notice period

Contractual notice is whatever is specified in the employee’s contract. It can’t be less than the legal (or statutory) minimum and should be suitable for the individual, the business, and the overall company culture.

Statutory notice period

The legal notice period is the minimum amount of notice you can provide to departing staff. The length of the statutory notice period depends on how long an employee has worked for you.

Do all employees have notice periods?

There are some situations where you don’t need to provide your staff members with a notice period.

For example, even if a person works under a zero-hour contract or are consider a ‘casual worker’, notice periods aren’t legally required but are still entitled to one. A person under a zero-hour contract doesn’t need to give notice if they’ve served less than one month in the business.

You can terminate contracts without notice, and they can leave without warning too.

However, it’s a good business practice to provide a ‘reasonable’ amount of notice when their employment ends.

Is everyone entitled to a notice period?

Even if there is no written contract, all employees must be given ‘reasonable’ notice when employment is ended.

But there are a few exceptions. Under the National Employment Standards, notice periods don’t apply to employees who:

• are casual staff

• are employed for a specific period of time (for example, a fixed term contract)

• do seasonal work

• are fired because of serious misconduct (for example, engaging in theft, fraud, assault or sexual harassment)

• have a training arrangement and are employed for a set period of time or for the length of the training arrangement (other than an apprentice)

• are daily hire working in the building and construction industry or in the meat industry in connection with the slaughter of livestock

• are weekly hire working in connection with the meat industry and whose termination depends on seasonal factors (but not where termination is due to other reasons).

Do employees have to work during their notice period?

If your employees sign a contract saying they must work during their notice period, they must adhere to it.

For many businesses, it’s common practice to give a minimum of one week’s notice when resigning.

If an employee doesn’t fulfil their notice period, your business could suffer from production issues. You could take your employee to court because of the damages they’ve inflicted. But this should always be a last resort.

Damages such as loss of profit are not easy to prove. You need to have documents that go into details about profits lost, as well as any costs for hiring cover staff.

Taking leave during a notice period

An employee can take annual leave during a notice period[SC1]  if the employer agrees to the leave. An employer can't force an employee to take leave as part of the notice period.

Notice can include public holidays. They don't extend the notice period.

An employee can take sick leave during a notice period if they give:

• notice of the leave as soon as possible

• evidence if the employer asks for it (for example, medical certificate)

PILON

Pay in lieu of notice (PILON) is a type of severance pay, which is given instead of working.

You can decide to provide PILON instead of asking employees to work through their notice. But they are still entitled to receive their notice pay as well. With this type of severance pay, the employee’s contract will end straight away.

However, it’s essential to note that the employee will not accrue leave during the notice period.

If an employer chooses to pay an employee in lieu of notice, they must ensure that the payment includes the employee’s full entitlements, such as superannuation and any accrued leave.

This approach can help maintain a positive relationship and ensure a smooth departure.

Redundancy notice periods

The length of notice will ultimately depend on service length and contract terms. The rules on redundancy notice periods, payment, and other entitlements should be outlined in employee handbooks and contracts.

If you’ve selected your employee for redundancy, you must give them the statutory minimum for notice periods.

Both voluntary and involuntary redundancy can use this calculation too.

Garden Leave

You may choose to use garden leave when employees serve their notice. The employee leaving doesn’t need to come into work, but you still have to pay them for their notice.

This type of leave may be used if they are leaving to join a rival business, risking them exposing your sensitive data.

Is a notice period letter necessary?

A notice period letter confirms that an employee has plans to leave their job. Your employee should refer to their contract, as this will state whether it’s needed in writing.

A letter of resignation should include the following:

• The date

• The name of the person it’s addressed to

• The title of the role they’re resigning from

• The last day of employment (this is based on contract and notice period)

• Their full name and signature

An employee can include details such as a thank you and details of the reason they’re leaving too.

An email that includes the list above may be valid as well. This needs to be stated within the employee’s handbook too.

After the employee has sent their letter or emailed you, you should hold a meeting to discuss the matter.

Get expert advice on notice periods with BrightHR

As an employer, you should be aware of the difference between statutory and contractual notice periods.

Your employee’s notice period should be clearly outlined to avoid any confusion. If not, they could bring legal action against you resulting in employment tribunals and costly fines.

BrightHR helps you manage notice periods with ease.

Browse our document library for over 350 ready-to-use policies, templates and guides, or get in touch and speak to one of our employment relations advisers on hand to help 24/7.

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