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Notice Periods

A recent topic of interest among some employers (and employees) is what period of notice should be given to end the employment relationship. This will depend on what your employment agreement states and also the circumstances surrounding the departure of an employee.

Ideally, your employment agreement should contain a period of time that the employee must give the employer and the employer must give the employee. This notice period must be the same for both parties.

The period of notice also needs to be reasonable. Depending on the role, this could be as little as two weeks or as much as four weeks. Senior roles within an organization may have a longer notice period of up to three months.

When thinking about how long the notice period in your employment agreement should be, we recommend that the starting point should be, "How long might I need to find a replacement?" Unfortunately, for some employers, the starting point is, "How quickly can I move the person out of the business?" This latter position is not the recommended starting point.

Just because an employment agreement has a notice period clause doesn’t mean that you, as the employer, can dismiss an employee for any reason as long as you give the appropriate notice. You must still have a good reason and must follow a fair process.

If your employment agreement does not have a notice period, then fair and reasonable notice must still be given. This should take into account the length of service, the type of job, how long it might take to replace the employee, and common practice in the workplace. Depending on the role, two to four weeks’ notice is often seen as fair.

Should you be in a situation where, having followed due process, you, as the employer, are now going to give notice of termination of employment, it is important to be aware of when the notice commences. The notice period commences from the next working day. If you tell a person that ‘today’ is their last day, this is effectively a summary dismissal (dismissal without notice). Such a dismissal can only be given in situations of serious misconduct, after having considered all the evidence, including the response of the employee. However, that is a topic for another discussion.

If an employee wishes to leave their employment with you, they must also give you the required notice of their resignation. They cannot just walk out the door – as that is not giving you any notice.

If the employment agreement states that notice must be given in writing, this applies equally to the employee as it does to the employer. This means that if the employee intends to resign, they must put it in writing. If the employment agreement is silent on giving written notice, as the employer, you should still request the employee to confirm their intention to resign in writing so that there is no confusion.

If the employee does not give the required notice, then the employer may be able to seek compensation for the period of notice not given. Always seek legal or professional advice before going down this path.

Once notice is given by either party, they can agree to not work out the notice period. Where the employer does not require the employee to work out the notice period, the employer must still pay the employee in lieu of working out their notice.

Where the employee does not want to work out their notice period and the employer agrees to a lesser notice period, then the employer only pays the employee for the lesser notice period worked (i.e. the employee is not paid for the portion of the notice period they do not work).

Trial Periods

The trial period can have a different notice period than the standard notice period. If this is the case, the notice period applying to the trial must be stated in writing within the trial period clause. If it is not stated, then the standard notice period applies.

A trial period cannot have a “no notice is required” notice – as this is a summary notice and would invalidate the trial period clause. Whatever period of notice you have; the best approach is to remember that the notice period commences the day after you give the notice.

This is important for the timing of giving notice within the notice period. You cannot give notice on the 90th day – as the notice comes into effect on the 91st day, which is outside the maximum period for a trial period that has expired. Notice must be given within the 90-day period, even if the notice continues beyond the 90-day trial period.

This means the latest trial period notice can be given is on the 89th day of the trial. If your trial period is for a lesser period than 90 days, the notice still needs to be given at least one clear day before the last day of the trial period.

Contact McKone Consultancy if you need advice or guidance on giving or receiving notice.

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