A guide to: Employment notice periods
Due to how quickly the world was hit by the pandemic, it has truly left both negative and positive effects. Many people have decided that this was an opportunity to change their careers.
Even though we have access to vaccines now, the world hasn't gone back to its previous state - and it will probably, never do. People are still switching careers, moving away from their age-old employers, companies are dismissing employees to reduce their workforce: you get the idea.
However, dismissing an employee before the contract expires isn't an easy task. The majority of companies find it harder to dismiss an employee than to hire one. The notice period is an essential component of such dismissals. Wondering what that is? Here's everything you need to know.
What is a notice period?
A notice period is a notice an employee must give his or her employer before resigning. It is also the notice period required by an employer to give an employee before the termination of their contract.
It is also worth noting that all the information you need to know about the notice period should be in the employment contract. It's something that the employer must make clear in the contract for the employee to be fully aware of it.
Under normal circumstances, both parties, i.e., the employer and the employee, must agree on the notice terms. However, if there's a dispute, the employment ordinance steps in to determine the notice period.
Calculating the notice period is an essential part of the streamlined dismissal process. It paves the way for both parties and lets them know what to expect from the other one.
What if I dismiss an employee without a notice period?
If you dismiss an employee without providing them a notice period, you'd have to pay them a certain amount. This phenomenon is called payment instead of notice (PILON), and the amount you have to pay depends on the contract. If the contract has set up PILON as an alternative to the notice period, you can use it without complication.
However, if the contract doesn't set up PILON as an alternative to a notice period, you will pay the amount to cover the damage resulting from your breach of contract.
If the contract allows PILON but doesn't specify an amount, it's up to you to negotiate an amount with the employee in question. However, the amount can't be lower than what the employee would have earned during the notice period. This doesn't only include their payroll but also the amount they would earn through commissions and compensations.
Moreover, the employee will either have the right to use your provided benefits during the notice period, or you would pay them compensation for that as well.
If you fail to compensate the employee for their loss; they can file a legal claim against you called the Breach of Employment contract claim.
How much notice do I need to give?
It is best to check your policy to know how much notice you must give. If your contract is unclear and you have been employed for a month or more, the minimum is 1 week.
However, it may reasonably be implied that you might provide much longer notice; for example, if you are in a very senior position. Consider what the industry standard might be for someone in your role.
In certain circumstances during your dismissal, you might be in a situation where you will be given what is known as a 'garden leave'; during your time between jobs, your employer can ask you not to work in the office, at home, or elsewhere.
Garden leave is the practice under which an employee leaves their job after they have resigned or had their employment terminated. They are asked to stay away from work during the notice period while still remaining on the payroll. Usually, Garden leave is given to senior individuals close to sensitive data or who hold most of the company's confidential information.
If you're dismissing an employee to reduce your workforce merely, it's called a redundancy dismissal, and you'd have to provide certain rights to the employee to compensate them.
Rights you must give
- A notice period before dismissal
- Redundancy pay if the employee has been working for you for more than two years
- Chance to speak to you about the matter and discuss any alternatives to redundancy
- Offer to a suitable replacement job in the same company or an associate firm
- Assistance from you to find a new job
There are many different types of rules when it comes to giving notice periods. However, the most common legal minimum/maximum notice period is:
For employments shorter than 1 month
If you're planning to dismiss an employee who has been employed for less than a month, there's no need for a notice period. You can part ways without the notice period calculation or any other complications.
For employments longer than one month to 2 years
If the employee has been employed for more than a month but less than two years, the notice period will be seven days. The notice could be documented or in verbal form - it depends on what the contract says.
For employments longer than two years
If the employee has been employed for more than two years, the notice period varies with the duration of the employment. For each year of work, there will be a 1-week notice. However, this formula is applied to employments that are less than 12 years.
For employments longer than 12 years
If the employee parting ways is a long-term one, i.e., working for you for more than 12 years, the notice period is capped at 12 weeks. It doesn't go any higher no matter how many years the employee has been in service.
Companies and their employees part ways often in these uncertain times. During dismissal, the notice period comes into play to allow the employee to plan for their career.
This article provides insight into the notice period; plus, there's a handy notice period calculator for you to determine the notice period for a particular employee quickly.
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