Paying no notice to notice periods

When an employee leaves without giving notice or short notice it is incredibly frustrating for an employer.  Unfortunately, it is not an uncommon situation, and we are often asked by employers what, if anything, can be done about it.   Here we provide some answers to this and other frequently asked questions about notice periods.  

How much notice must an employee give to terminate their employment? 

The employee’s contract of employment will normally set out how much notice they need to give to terminate their employment.  The notice must not be less than the statutory minimum period of notice that an employee is required to give, which is one week’s notice where they have been employed for one month or more (contrast this with the employer’s obligation to give one week’s notice for each complete year of employment). 

If the contract does not say how much notice the employee needs to give, or the employee does not have a contract, the employee must give a “reasonable” period of notice.  What is “reasonable” depends on factors such as:

• what was agreed verbally between the parties;
• what is usual for the type of industry in which the employee works;
• the employee’s length of service; and
• their seniority.  

Thankfully, since it has long been a legal requirement for an employee to be given a written statement of terms of employment, the instances in which an employer is having to rely on an argument based on what is a “reasonable” period of notice are rare.  

Is an employee obliged to work out their notice period?

Yes, unless you decide to pay the employee in lieu of notice or put the employee on “garden leave”.    The notable exception to this is where an employee says they are resigning in response to an employer’s fundamental breach of contract – otherwise known as a constructive dismissal.    Where an employee resigns in response to an employer’s fundamental breach of contract, the employee is entitled to leave immediately without notice because the fundamental breach severs the contract and the contractual obligations under it.   If you do receive a resignation letter where the employee says they are resigning in response to unfair treatment, it is best to get legal advice before responding.   

Can an employer insist that the employee work out their notice period? 

By not giving proper notice, the employee is in repudiatory breach of contract.  However, a repudiatory breach does not automatically terminate an employment contract.  The contract is not brought to an end until and unless the innocent party elects to accept the breach.   In theory, therefore, you could “refuse” to accept the employee’s breach and insist that the employee observe their contractual obligation to you to work out their notice period.   It is possible that an employee may be willing to work out their notice rather than risk being sued for breach of contract. 

However, in practice, it is highly unlikely you will be able to get an employee to work out their notice period – or that you will want to insist on this.  Having a disgruntled employee at work – who is only there because they have to be – is unlikely to be a positive influence on the rest of the workforce. 

What alternative action can be taken if an employee leaves without giving proper notice?

There are a few options available to an employer if an employee resigns without notice or with short notice (in circumstances where a constructive dismissal claim does not arise):

1. Claim for breach of contract.

The employer can bring a claim in the civil courts for breach of contract for the losses it has suffered as a result of the employee’s breach.   However, in most cases, it is going to be difficult for an employer to demonstrate it has suffered loss (or sufficient loss to make such a claim worth pursuing) because an employee has left without giving proper notice.   A situation where this may be conceivable is if the employee leaves just before a critical deadline and the employer has to bring in a contractor to finish the employee’s work in time.   In that case, the employer would have a reasonable argument for claiming against the employee for the cost of getting in the contractor.

2. Seek to obtain an injunction.

If there is an express clause in the employment contact allowing the employer to place the employee on garden leave, the employer could try to seek an injunction to prevent the employee working elsewhere during the period that would have been their notice period.  It is also possible to seek such an injunction even if there is no garden leave clause in the contract.  There is, however, no guarantee such an injunction will be granted.   It is also a very expensive course of action.  For these reasons, injunctions only tend to be sought when the employee presents a real and immediate threat to the employer’s business.

Can an employer make deductions from an employee’s wages for failure to give proper notice?

It is possible for an employer to withhold all or some of an employee’s final salary if the contract contains a specific provision allowing the employer to do this BUT it is not something that should be done lightly.  

A deductions clause of this nature could be challenged by the employee as being a penalty clause and therefore unenforceable.   An employer wanting to rely on such a contractual provision would need to be able to show that the deduction clause was not a penalty but a genuine pre-estimate of loss.   Much will depend on how well drafted the deductions clause is.  A deductions clause that is clear as to the circumstances in which it will apply and the level of deduction that will be made and contains a sliding scale of deductions depending on how long a notice period the employee works, will stand a better chance of being enforceable.

Consideration also will need to be given to whether there are any consequences in relation to national minimum wage provisions if, once the deduction is made, the employee will receive less than the national minimum wage for the hours worked.   That said, deductions from pay made under the contract because of an employee’s conduct do not reduce the amount of an employee’s total pay for the purpose of the national minimum wage.   There is a decent argument that making a deduction from pay where an employee has failed to give proper notice should be regarded as a deduction from pay because of the worker’s conduct and therefore which should not be counted in establishing minimum wage compliance.

Can we waive an employee’s notice period?

An employee’s notice period (like an employer’s notice period) can only be shortened or dispensed with by mutual consent.   So, if an employee asks to be released early from their notice period – for example, because they have found another job and their new employer wants them to start early – the employer can agree to relieve the employee of the obligation to work during the notice period.  In return, the employer will be relieved of the obligation to pay the employee for the remainder of the notice period. 

What an employer cannot do is inform an employee who has given proper notice, that they only need to work for part of their notice period.   The employee is entitled to work (unless they are put on garden leave) and to be paid for the entirety of their notice period.  

What happens if an employee gives formal notice to terminate and the notice is longer than required under their contract?

Sometimes a situation will arise where an employee resigns but the notice is more than they are required to give under the terms of their contract of employment.   This can cause an employer a problem if they do not want the employee to serve longer than the notice they are contractually required to give. 

Unfortunately, there is not much the employer can do in this situation.   Formal notice, once given, cannot be refused by an employer (and vice versa).   If the employer gives the employee a counter-notice to shorten the notice period, this will be a dismissal.  This means the employee will be able to bring a claim for the unpaid notice pay in respect of the original period of notice they gave.   

Any more questions?

These are just a few of the many questions that can arise in relation to notice periods and notice pay.   Please do not hesitate to contact us if you have a question that we have not addressed or would like clarification on any of the points in this article.