Notice Periods UK: What Employers Need to Know

Getting notice periods right is one of those things that sounds straightforward until someone actually resigns or you need to let someone go. Then the questions start. How much notice are they entitled to? Can you pay them off instead? What happens if they just stop showing up?

This guide covers everything UK employers need to know about notice periods: the statutory minimums, how contractual notice works, how to calculate notice pay, and what your options are when someone is working their notice.

Last updated: April 2026

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Notice Period Employer Guide UK: The Basics

A notice period is the amount of time between an employee being told their employment is ending (or handing in their resignation) and their actual last day of work. It applies whether the employer is terminating or the employee is resigning.

There are two types of notice period:

1. Statutory notice: the legal minimum set by the Employment Rights Act 1996 (ERA 1996), section 86. This applies regardless of what the contract says.
2. Contractual notice: whatever notice period is written into the employment contract, which can be longer than the statutory minimum but never shorter.

If the contract is silent on notice, or if the contractual notice is less than the statutory minimum, the statutory minimum applies automatically. You cannot contract out of it.

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Statutory Notice Period UK Employer: The Legal Minimums

Section 86 of the Employment Rights Act 1996 sets the minimum notice an employer must give to an employee. The amount depends on how long the employee has been continuously employed.

Statutory Minimum Notice Periods (Employer to Employee)

| Length of Continuous Service | Minimum Notice Required | |---|---| | Less than 1 month | None | | 1 month to less than 2 years | 1 week | | 2 years | 2 weeks | | 3 years | 3 weeks | | 4 years | 4 weeks | | 5 years | 5 weeks | | 6 years | 6 weeks | | 7 years | 7 weeks | | 8 years | 8 weeks | | 9 years | 9 weeks | | 10 years | 10 weeks | | 11 years | 11 weeks | | 12 years or more | 12 weeks |

The rule is simple: one week of notice for each complete year of service, up to a maximum of 12 weeks.

Statutory Notice From Employee to Employer

Employees are required to give at least one week's notice once they have been employed for one month or more. This does not increase with length of service. It stays at one week regardless of whether they have been with you for 2 years or 20.

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Contractual Notice Period UK: What You Can Set

The statutory minimums are just that: minimums. Most employers set longer notice periods in the employment contract. This is your contractual notice period.

Common contractual notice periods include:

• 1 month for most standard employees
• 3 months for senior or specialist roles
• 6 months for directors or C-suite executives

You are free to set whatever contractual notice period is reasonable. However:

• The contractual period must meet or exceed the statutory minimum. A contract that says "2 weeks notice" for someone with 5 years of service is overridden by the statutory 5 weeks.
• The notice period should be clearly stated in the employment contract. A vague or missing notice clause is a common source of disputes.
• Notice periods do not have to be reciprocal. You can require 3 months' notice from the employee but only commit to giving 1 month yourself, though this is unusual and can cause friction.

Fixed-Term Contracts

Fixed-term contracts typically end on the agreed date without notice. If the contract includes an early termination clause, the notice period in that clause applies. Without one, ending the contract early may require paying out the remainder of the term.

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How to Calculate Notice Pay UK

When an employee works their notice period, they are entitled to their normal pay and benefits throughout. This includes salary, pension contributions, private health cover, car allowance, and any other contractual benefits.

The Calculation

For most employees, calculating notice pay is straightforward:

1. Identify the notice period: statutory minimum or contractual period, whichever is longer.
2. Calculate normal weekly pay: for salaried employees, divide annual salary by 52. For hourly workers, use average weekly hours over the previous 12 weeks multiplied by hourly rate.
3. Multiply by the number of notice weeks.

Example: An employee earning £36,000 per year with a 3-month contractual notice period.

• Weekly pay: £36,000 / 52 = £692.31
• Notice pay: £692.31 x 13 weeks = £9,000

Pay in Lieu of Notice (PILON)

Instead of having someone work their notice, you can pay them in lieu of notice (PILON). This means their employment ends immediately and they receive a lump sum covering what they would have earned during the notice period.

Important points about PILON:

• If your contract includes a PILON clause, the payment is treated as earnings. It is subject to income tax and National Insurance in the usual way.
• If the contract does not include a PILON clause and you choose to pay in lieu anyway, the first £30,000 of the termination payment may be tax-free (as a termination award under s.401 ITEPA 2003). However, the portion representing basic pay during the notice period (known as "post-employment notice pay" or PENP) will still be taxable.
• Always check the contract wording. A badly drafted PILON clause can cost you more in tax than you expect.

Statutory Notice Pay

During statutory notice (not contractual notice), employees have additional protections under s.87-91 ERA 1996. If they are off sick, on holiday, or absent for other reasons during their statutory notice period, they are still entitled to their normal pay for that period. This is sometimes called "statutory minimum notice pay" and it catches many employers out.

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What Happens During the Notice Period

Working Notice

The default position is that the employee works as normal during their notice period. They remain employed, keep all their benefits, accrue holiday, and are subject to all the usual contractual obligations including confidentiality, non-compete clauses, and duties of good faith.

Gardening Leave

Gardening leave means the employee remains employed and on full pay, but is not required (or allowed) to attend work or carry out duties. They are essentially paid to stay at home.

Gardening leave is commonly used for:

• Senior employees with access to confidential information
• Employees joining a competitor
• Situations where having someone "work out" their notice would be disruptive

To place someone on gardening leave, you should have an express gardening leave clause in the employment contract. Without one, sending an employee home on full pay could technically be a breach of contract (the employee has an implied right to work). In practice, few employees object, but it is worth having the clause.

During gardening leave, the employee remains bound by all contractual obligations, including restrictive covenants. The gardening leave period effectively "uses up" part of any post-termination restriction, making it harder for the employee to argue the covenant is unreasonable.

Employee Conduct During Notice

Employees remain subject to your normal disciplinary procedures during their notice period. If an employee commits gross misconduct during their notice, you can dismiss them summarily (without notice) just as you would at any other time. See our guide to disciplinary procedures for the process.

Be cautious about manufacturing a misconduct dismissal to avoid paying notice. Tribunals are well aware that some employers suddenly "discover" misconduct once an employee is under notice.

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Dismissal Without Notice: When Is It Lawful?

You can dismiss an employee without notice only where there is gross misconduct. This means conduct so serious that it fundamentally undermines the employment relationship. Examples include theft, fraud, violence, serious insubordination, or a serious breach of health and safety rules.

Even in gross misconduct situations, you must still follow a fair disciplinary process. Dismissing without notice is not the same as dismissing without procedure. You still need to investigate, hold a hearing, and give the employee the chance to respond.

If you get this wrong, the employee may have a claim for:

• Wrongful dismissal (breach of contract for not giving notice)
• Unfair dismissal (for failing to follow a fair process)

Under the Employment Rights Act 2025, the qualifying period for unfair dismissal claims is being reduced to day one (expected 2027). This makes it even more important to get dismissal procedures right from the start. See our guide to probationary periods under ERA 2025 for how this affects new hires.

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Notice Periods in Redundancy

When making employees redundant, notice periods apply in exactly the same way. The employee is entitled to whichever is longer: statutory minimum notice or contractual notice.

For employees with long service, this can add significant time and cost to the redundancy process. An employee with 10 years of service is entitled to at least 10 weeks' statutory notice, even if their contract only says 1 month.

In redundancy situations, PILON is common. Employers often prefer to pay in lieu rather than have employees working through a lengthy notice period after being told their role is going. Remember the tax implications discussed above.

Also note that since April 2026, the collective redundancy protective award has been doubled from 90 to 180 days' pay. Combined with notice pay and redundancy pay, the cost of getting a collective redundancy wrong is now substantial.

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Common Mistakes Employers Make

1. Not including a notice clause in the contract. If the contract is silent, you are stuck with the statutory minimum from the employee and may face arguments about "reasonable notice" from your side. Always specify the period. Our employment contract requirements guide covers what your contract should include.

2. Forgetting that statutory notice overrides shorter contractual notice. A contract that says "1 week notice" is fine for someone with 6 months of service. It is not fine for someone with 8 years.

3. Not having a PILON clause. Without one, you either have to let the employee work their notice or risk a wrongful dismissal claim. Include a PILON clause in every contract.

4. Ignoring the tax rules on PILON. The PENP rules (post-employment notice pay) mean you may owe tax even on payments that look like they should be tax-free. Take advice.

5. No gardening leave clause. If you want the option to place someone on gardening leave, you need it in the contract. Retrospectively trying to enforce it is messy.

6. Failing to pay benefits during notice. Employees are entitled to all their normal contractual benefits during notice, not just base salary. Pension, car allowance, health insurance: it all continues.

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The ERA 2025 Impact on Notice Periods

The Employment Rights Act 2025 does not directly change statutory notice periods. Section 86 ERA 1996 remains as it is.

However, the ERA 2025 changes have indirect implications:

• Day one unfair dismissal rights (2027): Once the two-year qualifying period is removed, every dismissal from day one must be fair. That includes dismissals during notice periods. Getting the process wrong from the start carries real risk.
• Probationary periods: The government has indicated that a lighter-touch dismissal process will apply during an initial period (likely 9 months), but the details are still in consultation. Employers should plan for notice periods to apply from day one regardless.
• Zero hours contract changes (Autumn 2026): Workers on zero hours contracts gaining the right to guaranteed hours will also have clearer notice entitlements. If you use casual or zero hours workers, review your notice provisions.

Make sure your contracts are up to date. If you are still using pre-2026 templates, now is the time to review them.

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Get Your Contracts Checked

Is your notice period clause ERA 2025 compliant? The EmployerKit Audit reviews your employment contracts and flags gaps. From £49. Visit employerkit.com/tools/employerkit-audit.

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Frequently Asked Questions

Q: What is the minimum notice period an employer must give in the UK?

A: It depends on the employee's length of service. Under section 86 of the Employment Rights Act 1996, there is no minimum notice for the first month. After one month, the minimum is one week. After two years, it is one week per year of continuous service, up to a maximum of 12 weeks for employees with 12 or more years of service. The contractual notice period applies if it is longer than the statutory minimum.

Q: Can an employee waive their notice period?

A: Yes, but only by mutual agreement. If an employee resigns and asks to leave immediately, you do not have to agree. If you do agree, no further notice pay is owed. If you want them to leave early but they want to work their notice, you will need to use a PILON clause (if you have one) or negotiate an exit. You cannot unilaterally shorten the employee's notice without their consent.

Q: What happens if an employee refuses to work their notice?

A: If an employee simply stops turning up during their notice period, they are technically in breach of contract. You can withhold pay for the unworked period. In practice, suing an employee for breach of contract over notice is rare and usually not worth it, except for very senior roles where the disruption is significant. Prevention is better: include a clear notice clause in the contract and a clause allowing deduction of pay for unworked notice.

Q: Do notice periods apply during probation?

A: Yes, unless the contract expressly states otherwise. Many employers include a shorter notice period during probation (for example, one week from either side). This is perfectly lawful provided it meets the statutory minimum. If the contract does not mention notice during probation, the full contractual notice period applies.

Q: Can I put an employee on gardening leave during their notice period?

A: You can if the employment contract includes a gardening leave clause. Without such a clause, you may still be able to do so in practice (since you are still paying the employee), but there is a risk that preventing them from working could be a breach of the implied duty to provide work. For senior roles especially, include a gardening leave clause from the outset.

Q: Is notice pay taxable?

A: If the employee works their notice or you have a PILON clause in the contract, notice pay is taxed as normal earnings (income tax and NI). If there is no PILON clause and you make a payment in lieu, the portion representing basic pay during the statutory notice period (PENP) is still taxable. Only genuine termination payments above the PENP amount benefit from the £30,000 tax-free threshold.