Monthly Archives: May 2017

Notice of Termination

Setting aside Unfair Dismissal concerns an employer needs to serve notice lawfully under a contract of employment to bring it to an end, apart from a dismissal for gross misconduct.

An employer must follow the notice periods in an employment contract and if this is less than the statutory minimum, set out in section 86 of the Employment Rights Act, then the statutory notice will apply. This is when an employee has been employed for more than two years, but less than 12 years, an employee is entitled to one week’s notice for each complete year of continuous employment.

But how should an employer give notice?

Tell them, though sometimes it is not always that straightforward. It is better to inform them in person or hand over the notice letter to them. In the case of Gisda Cyf v Barratt, the Supreme Court found that even though the employee was dismissed without notice, the effective date of termination did not take place until the employee had read the letter.

Even, if an employee is on holiday, as in the case of Newcastle upon Tyne NHS Foundation Trust v Haywood. The notice was not effective until she had returned from holiday and read the letter. Unless there is an express term in the contract which specifies when the notice takes effective an employer needs to be careful when sending the termination letter by post.

Pay in lieu of notice (PILON) clauses

This is a useful clause to bring a contract to an end, especially if you do not want an employee to work their notice. However, an employer needs to tell an employee that they are making a pay in lieu of notice in accordance with the contract of employment. In the case of Societe Generale, London Branch v Geys, the employment contract stated that the ‘[bank] reserves the right to terminate your employment at any time with immediate effect by making a payment in lieu of notice…’ . It was found that the employee would not be expected to check his bank account regularly in order to discover whether he is still employed. The contract and termination letter needed to be worded more clearly.

If an employer wants to terminate immediately and there is no PILON clause. there is a risk that the employee does not ‘accept’ the breach of contract. although this is an unusual situation it does happen that an employee would prefer to stay in work to look for another job during the notice period.

Notice pay

Notice pay is usually set out in the contract or should abide with the statutory notice period. However, there is a very strange quirk in the ERA, section 87(4) where the employer does not have to pay notice to an employee at the normal rate if they are absent for illness or family leave, where the notice to be given by the employer under the contract is at least one week more than the statutory notice.