From Lawpack's Employment Law Made Easy.
The proper notice that your employer must give should be specified in your contract of employment. If a notice period has not been expressly agreed, your employment may be terminated upon 'reasonable' notice. What is reasonable depends on factors such as your seniority, age, length of service, remuneration and what is usual in your profession or industry.
Whatever the contractual provisions for termination of the contract, the notice actually given must not be less than the statutory minimum period of notice, which is as follows:
- Employee's length of service less than 1 month - No notice period
- Employee's length of service is 1 month to 2 years - 1 week
- Employee's length of service is 2 to 3 years - 2 weeks
- Plus an additional week for each year of continuous employment to a maximum of 12 weeks
If proper notice is given, you will have no claim for compensation. However, you may still have a valid claim for unfair dismissal even if proper notice is given.
Whether you or your employer are terminating your employment, it's common for the employer to want you to cease working immediately. This is often because of the risk that you may not continue to work effectively and that you may be disruptive in the workplace. In these circumstances, it's usual for your employer to pay you a sum in lieu of notice or as compensation for failure to give notice.
Sometimes the contract will expressly provide that it may be terminated on payment of a sum in lieu of notice. In these circumstances when the payment is made, tax and National Insurance deductions should be made in the usual way.
If there's nothing in the contract relating to making payments in lieu, the payment may be paid tax-free up to a limit of £30,000 and without deduction of National Insurance contributions. It's not always entirely clear whether the payment is tax-free, so it's worth seeking advice on this point.
If a payment in lieu of notice is made, it's not only your salary, but also all benefits, such as a company car, that must be included in the calculation. The exception to this would be if your contract stated that pay in lieu of notice does not include benefits.
Dismissal without notice and without pay in lieu of notice entitles you to claim damages for your notice pay and benefits; this claim is known as wrongful dismissal. The exception is if you are guilty of gross misconduct, in which case your employer would be justified in dismissing you with immediate effect. What constitutes gross misconduct does depend upon the work environment. Examples of gross misconduct are theft, damage to an employer's property, incapacity for work due to being under the influence of alcohol or illegal drugs, physical assault and gross insubordination, or misuse of email and the internet.
Law stated as at 1 March, 2006