“What exactly is a notice period?”

First published: February 3rd 2012
Last updated: August 23rd 2023

Notice periods are extremely important but they tend to be that one aspect of a contract that employers can often overlook.

If an employer is looking to recruit an employee, very often the last thing that will come to mind is the employee finishing up but it’s prudent to be prepared for this eventuality.

A well-drafted notice period clause will help you manage any disruption caused by an employee handing in their resignation.

Minimum Notice Periods: What are they?

There is often confusion around what notice periods employers and employees must comply with if there is no contract of employment in place.

In these circumstances, it’s important for employers to be aware of the Minimum Notice and Terms of Employment Acts 1973-2001.

This legislation clearly outlines employers’ obligations to provide employees with appropriate notice periods based on their length of service.

The legislation addresses both:

1. notice to be given by the employer; and
2. notice to be given to the employee.

Notice to be given by the employer

These notice periods would apply in a scenario where the employer terminates the employee’s contract for misconduct, competence, redundancy or some other substantial grounds.

Notice to be given by the employee

These notice periods apply in circumstances where the employee resigns their position. The statutory minimum of one week is unlikely to allow you to replace the employee and highlights the need for a notice period clause in the contract of employment.

Termination payments must include statutory notice period

You must ensure that any termination payment includes the minimum notice entitlements under the Minimum Notice and Terms of Employment Acts. You risk suffering a claim if you fail to calculate the termination payment correctly.

You are not permitted to contract out of the minimum notice periods but you can agree notice periods with employees in the contract of employment that are longer than the statutory minima.

PILON (Payment in Lieu of Notice)

PILON clauses can be very useful for employers. This contractual provision permits an employer to pay the employee their entire notice pay in a lump sum in return for agreeing not to work out their notice period.

You may have reason to restrict the employee’s access to your premises as part of the termination process and a PILON clause allows you to do this.

It’s also important to note that although an employer may pay in lieu of notice, this does not affect the employee’s termination date which remains the date the contractual notice period expires. This would be important for calculating redundancy payments for instance.

When Can an Employer Withhold Notice Pay?

Section 8 of the Minimum Notice and Terms of Employment Act, 1973, provides that an employer may summarily dismiss an employee without notice where they have committed an act of gross misconduct.

The Workplace Relations Commission will construe section 8 narrowly and will award an employee their notice pay if (a) the conduct in question wasn’t gross misconduct and (b) where the employer did not follow a fair and correct disciplinary procedure.

Another occasion where an employer can withhold notice pay is where an employee claims redundancy through the RP9 process.

This is where an employee has been on lay-off or short-time working hours for:

• a) at least 4 continuous weeks, or
• b) for an aggregate total of 6 weeks in a period of 13 weeks,

and as a result the employee exercises their right to claim redundancy.

If the employee does so and the employer does not or cannot counter that redundancy claim then the employer may lawfully withhold notice pay.

Another occasion where an employer may withhold notice pay is where an employee refuses to work their contractual notice, irrespective of whether it was the employee or employer who terminated the employment relationship.

Expert Employment Law Advice for Contractual Notice Periods

Although sometimes overlooked by employers, notice periods should always be clearly outlined in your contract of employment.

You may need to rely on this clause if an employment relationship ends on poor terms.

For instant expert advice on drafting contracts and documentation that protect your business, just call 1800 719 216 today.