Calculating the notice period when employment ends

Whether you're an employer having to make the difficult decision to give someone their notice, or an employee who's thinking of moving on to greener pastures, it's important to understand what your notice period is and how to calculate it.

Let's take a quick look at how the notice period works, how to calculate your notice period, and what pay you should receive during this period.

What is a notice period?

Before ending an employment contract, both employers and employees must give notice of at least the minimum notice period. This could mean the statutory minimum notice period, which is the minimum notice period in the UK as stated by law, or it could mean a contractual notice period, which will be stated in your employment contract. An employment contract can't state a notice period which is less than the statutory notice period: it's the legal minimum.

The purpose of a minimum notice period is to make sure that both the worker and their employer are protected, and neither will be left in the lurch if an employment contract is terminated without proper notice.

The first thing to do before you terminate any employment - whether you're an employee or an employer - is to check whether your contract includes a contractual notice period. If it does, you'll have to stick to this even if the statutory notice period is much shorter.

All about the statutory notice period

If your contract doesn't specify a notice period, the statutory notice period applies. This is set out under Section 86 of the Employment Rights Act 1996, and it is the minimum amount of notice required before any contract is terminated.

Your statutory notice period will depend upon how long you or your employee has been with the organisation; generally speaking, the longer the length of employment, the longer the notice period will be. You can read more about how to calculate your minimum notice period below, using our notice period calculator instructions.

How to work out your notice period

Before you work out your notice period, it's important to know that the notice period depends on whether the employee is resigning or being dismissed.

If they're resigning from a role and there's no notice period mandated by their employment contract, the minimum notice period is one week's notice provided they've worked for their employer for at least one month. If they've been in their job for less than one month, there is no statutory notice period if they resign.

In cases where they're being dismissed, the employer must give a minimum of one week's notice for employees who have been employed for between one month and two years. For employees employed for over two years, one week's notice must be given for each full year they've been employed for, up to a maximum of 12 weeks.

This means an employee of five years must be given at least five weeks' notice, and an employee of 12 years must be given at least 12 weeks' notice. Employees of over 12 years must also be given 12 weeks' notice at minimum, and so on.

Photo by Iryna Tysiak / Unsplash

Should you be paid during your notice period?

If you're an employee, you're entitled to your full regular pay during the statutory notice period even if you're dismissed and your employer tells you not to come to work. This means your normal salary if you're a salaried worker, or an average weekly pay if your pay fluctuates week to week.

You can work out your average weekly pay adding the total amount of weekly pay you earned in the 12 weeks leading to your notice period, and then dividing this number by 12. This will tell you your notice pay entitlement per week for the full duration of the statutory notice period.

Your notice period pay should also factor in regular overtime in cases where this is paid, as well as any bonuses or commission pay.

If you are entitled to a contractual notice period which is longer than the statutory notice period, you are not entitled to full pay during any additional contractual notice period that goes beyond the statutory notice period unless you're working throughout this period. No matter whether notice has been given, as an employee you should always receive your full regular pay for any hours that have been worked.

How does statutory notice work on furlough?

If you've been furloughed from work, statutory notice rules still apply as normal. This means you or your employer must still give the minimum statutory notice required to terminate your employment, and during the notice period if you are still not working, you must be paid your full normal pay - not the 80% rate that you were being paid while furloughed.

UK employment law isn't always easy to make sense of, but it's important to have a basic grasp on it whether you're an employer or just an employee. The statutory notice period exists to offer security and stability to the UK workforce, so make sure you know your rights - and your responsibilities.