Notice periods: pitfalls to avoid
5 September 2025
When an employee resigns or an employer dismisses an employee, notice usually needs to be given to end the employment relationship. While this may seem straightforward, it is not always clear in practice, and unclarity around notice can lead to costly legal disputes.
Notice can also critically impact other matters. For example, the timing and duration of notice given can determine whether the employee has the right to bring an unfair dismissal claim, or whether they are entitled to an annual bonus payment. If an employer does not comply with the notice provisions in the employee’s contract of employment, this can also release the employee from restrictions intended to protect the employer’s business after termination.
In this article, we set out the key requirements relating to notice and look at a number of potential pitfalls in a typical employment situation where a notice period applies. We do not address the scenarios where employment can be brought to an end without notice (usually because of the employer’s or employee’s conduct, or on the expiry of some fixed-term contracts).
Statutory notice periods
By law, an employer must give an employee a minimum amount of notice to bring their employment to an end. This statutory minimum requirement increases with the employee’s length of service:
Length of service Minimum notice the employer must give
Less than 1 month None
1 month but less than 2 years 1 week
2 years or more 1 week for each year of employment, up to a maximum of 12 weeks
An employee must give one week’s notice, if they have been employed for one month or more.
The statutory minimum notice periods given above may be exceeded by a contractual notice period, in which case the contractual notice period will prevail, but if a contract specifies less notice than the statutory minimum, it will be deemed varied to contain (at least) the statutory minimum notice. If either party gives shorter notice than the statutory minimum, this will be a breach of contract, regardless of what the contract actually states.
Giving notice when the contract is silent
If a contract does not specify a notice period, complying with the statutory minimum notice period is not the end of the story, since at common law a contract is subject to the implied term that, absent any notice provision, it may be terminated on reasonable notice. A court or employment tribunal may therefore imply a longer notice period than the statutory minimum, depending on what it deems to be reasonable. What a court determines as reasonable will take into account the intentions of the parties at the time the contract was formed or varied, including factors such as the individual’s seniority and length of service, the notice periods which apply to comparable employees, and typical practice within the relevant industry. Courts commonly imply notice periods longer than the statutory minimum. If (which is relatively unusual) an employee’s contract is silent on notice, it is usually sensible to take legal advice before determining how much notice to give, especially where the employee is senior or occupies a key position within the business.
Minimum notice requirements from the employee
To protect a business, it is often sensible to require employees to give more notice than the statutory minimum of one week, by including a longer notice period in their contract. To be acceptable to the employee, this may need to be in keeping with market norms and the employee’s level of seniority. Often, employers specify reciprocal notice terms, so that an employee is required to give the same amount of notice they are entitled to receive.
Uncertain contractual terms
The contract should specify the notice period and how notice should be given. Unless the contract says that notice has to be given in writing, it can be given verbally. Verbal notice of termination, or attempting to impose a notice period where the contract is silent, can lead to arguments over whether/when the notice period commenced and whether/when it will expire. Such disputes can rapidly escalate into further disputes around the calculation of pay and benefits , or even as to whether employment has actually terminated at all. Certainty as to the termination date is also crucial to the issue of whether an employee is within the statutory time limits for bringing an employment tribunal claim. All such uncertainties are potentially extremely costly to litigate.
Clear wording specifying how much notice must be given, and how, can often avoid such disputes. Usually, an employment contract should specify two notice periods: a shorter one during the probationary period, and a longer one thereafter. It should also specify that notice must be given in writing.
Breach of contractual notice
Giving an employee less notice than the contract requires (which may be considerably more than the statutory minimum, especially in the case of senior employees) will put the employer in breach of contract. It is important to always check the notice provisions in the employment contract, to avoid the consequences arising from a breach. A breach of contractual notice by the employer will mean that:
the employee can bring a case for wrongful dismissal, which usually consists of a claim for the pay and other benefits they would have received during the full notice period; or
the employee could insist that their employment continues, by refusing to accept the employer’s breach and ‘affirming’ the contract. Although this is rare in practice, it will allow the employee to remain employed and qualify for benefits that accrue after a certain date, such as a bonus.
If the employee does not give contractual notice, the employer could bring a contract claim for additional costs such as taking on temporary staff, but this is rare in practice.
Agreeing a shorter notice period or no notice
Having been given notice or resigned, an employee may wish to leave sooner than their notice period allows. This may also be an attractive option for the employer, for instance if they think the employee is ‘killing time’ during the notice period, or in circumstances where the relationship has soured and the employer would prefer to distance the employee from key clients. It is important to ensure that such an arrangement is properly recorded to avoid the employee subsequently arguing that they were underpaid for their notice or that they were released from any post-termination contractual obligations.
Attempting to avoid unfair dismissal protection by giving short notice
Usually, an employee can bring a claim for unfair dismissal only when they have two years’ employment by the termination date. (This is almost certain to change, however, when the Employment Rights Bill comes into force.) It should be noted that giving less than the statutory one week’s notice to prevent an employee from gaining unfair dismissal protection will not be effective. When calculating length of service for unfair dismissal rights, a tribunal will add any unserved period of statutory notice, even if this falls after the date the employee left the business.
Making a payment in lieu of notice outside the contract terms
Paying an employee a lump sum equivalent to their notice pay, called a ‘payment in lieu of notice’ (PILON), can allow an employer to dismiss an employee with immediate effect. However, terminating immediately and making a PILON is lawful only if the contract allows for it, and it will otherwise represent a breach of contract. If the employee is content with the arrangement, sometimes the breach of contract will present no problem in practice, but it is important to note that, regardless of whether or not the employee agrees to the PILON, a PILON in breach of contract will always mean the employee is released from any post-termination restrictive covenants, such as prohibitions on working for competitors for a specified period. If an employer is considering making a PILON, therefore, it is important to ascertain whether it is allowed for in the employment contract, and if not, whether this will vitiate important post-termination protections. It is also important to check whether a PILON needs to include all an employee’s contractual pay and benefits; again, getting this wrong will usually constitute a breach of the employee’s contract. If you wish to make a PILON but the employee’s contract does not allow for it, it is best to take legal advice to ensure you can assess the risks which may arise from giving up post-termination protections for your business or creating the risk of a wrongful dismissal claim.
How we can help
We can help you ensure that your employment contracts are effectively worded, including appropriate provisions for PILONs. We can also advise you on minimising risks to your business if a proposed dismissal might breach an employee’s contract.
For further information, please contact the team at Synchrony Law.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.