3-Month Notice Period: A Guide for Employers

In this employer's guide to three-month notice periods, we will explain everything you need to know including your employee's obligations after giving their notice, what to do if they refuse to work the notice period and situations where it may be better to allow employees to leave before the agreed time.

Need expert HR or legal advice about employee notice periods? Get in touch with us today.

What Does Three Months Notice Mean?

When an employee gives three months' notice, they are stating that they will leave their job at the end of a three-month period. Three-month notice period clauses are added to contracts to protect an employer's interests. It allows you time to find a replacement, train a new employee and avoid any workforce gaps in your company.

The three-month period can either begin on the day your employee gives their notice or from the date their contract ends, depending on what was agreed between the employee and your company in the employment contract.

What Happens When Your Employee Hands in Their Notice?

When your employees give notice that they will be leaving in three months' time, you need to honour this period as part of your contract with them. The employee must continue working during their notice period unless there are exceptional circumstances that prevent them from doing so such as sickness or injury.

Is the Notice Period Always Three Months?

In the vast majority of cases, the notice period is three months. However, in some industries, the period may be longer or shorter depending on what has been agreed between an employer and their employees. Some jobs may only require one month's notice because they are for fixed-term periods where employment ends automatically when the contract expires while others may have much longer notice periods of six or twelve months.

Why Do Employees and Employers Have To Honour The Three Month Notice Period?

There are a few reasons why both employees and employers must honour a three-month notice period.

Firstly, it is an important part of the contract between your company and the employee. If you fail to honour this clause in their employment contract then your employee can take action against you for breach of contract which will be expensive both financially and reputationally if they win.

Secondly, by agreeing on a notice period at the start of employment, both parties are able to plan ahead with more certainty. Your employees know that they have three months left before they need to leave so they can get their affairs in order. Similarly, the notice period enables you to find a replacement and prevents other employees' workloads from increasing unexpectedly due to someone leaving suddenly.  

What Can You Do if Your Employee Leaves Before the Period is Finished?

If your employee leaves their job before the three-month notice period is up, or they refuse to honour the agreed notice period altogether, they will be in breach of their contract. If this happens, the first thing you should do is refuse to pay them for the unworked days.

You can also take legal action against them and seek financial compensation for any losses you have incurred as a result of their premature departure. If you are currently in this situation, get in touch with our legal experts and we can help you hold the employee to account for breaching their contract.

There are situations in which some employers choose to allow employees to leave before the notice period is up. This may be because they have found another job that begins immediately or because they have health or family issues. These are not excuses, however, for an employee refusing to work their notice period and you are not obligated to release them from their contractual obligations just because it will be more convenient for them.

What Does "Pay in Lieu of Notice" Mean?

If your employee's contract has a "pay in lieu of notice" clause, you can decide to let them go immediately without them working the normal three months. You will need to pay them their salary and benefits for those three months but it means that you can bring in a replacement straight away or make any other necessary preparations for life without that employee.

Some situations where pay in lieu of notice may make sense for your business include:

• When you urgently need to reduce staff numbers.
• When there's no real loss if someone leaves early, such as if the employee is close to retirement or only works part-time anyway.
• The employee has caused significant issues at your company so it is better to just clear them out and start fresh without them.

Can You Ask Your Employees to Leave Immediately Without Pay?

There are various situations when it may be to everyone's advantage for your employee to leave without working the full three months' notice or receive pay in lieu of notice.

For example, if they have a new position that will begin immediately, and you don't need to replace them then it may be better for them to leave without any notice or pay.

Similarly, if you have found a replacement who can start immediately and your employee would prefer to leave immediately for personal reasons, then both parties may agree to let the replacement start as soon as possible.

You may also be able to come to an agreement where the employee agrees to work a portion of their notice until you find a replacement. When that happens, the old employee may then receive payment in lieu of notice for the remaining period or leave without further pay depending on your agreement.

As long as both parties agree, then there should be no legal issues. Just make sure you get your employee's agreement in writing so that they can't later claim you released them illegally.

Can Employees Take Holiday During Their Notice Period?

Employees are usually entitled to take holiday during their notice period. Many employees like to use their remaining holiday days for the last week of their three-month notice so that they can finish early.

It is important that you are clear in advance with your employee whether this is allowed so that there are no misunderstandings later on.

How Should You Treat Employees Who Have Given Their Notice?

All UK workers have a number of employee rights and it is very important that you do not infringe upon any of these rights just because an employee has handed in their notice. These include:

• The right to continue working during the notice period without being discriminated against for resigning.
• The right to receive the same benefits as other employees until their notice period runs out.
• The right to continue to use company facilities such as a work computer, telephone and email account.
• The right to receive a reference that fairly reflects their work performance and isn't negatively affected by their decision to lead.
• The right to not be discriminated against in any way. For example, you cannot assign an employee unfavourable tasks or refuse them shifts that are usually available to them as punishment for leaving.

What Can You Do if You are Accused of Discrimination?

If one of your employees or ex-employees accuses you of discriminating against them because they handed in their notice and wanted to leave your company, then you should first try to resolve the issue informally. You may be able to solve the problem by speaking with your employee and explaining that you did not intend to discriminate against them in any way.

If this doesn't work or if it is an employment tribunal claim, then you will need to defend yourself legally. This can be a difficult and time-consuming process, so make sure you have good legal representation.

At Neathouse Partners, we have extensive experience with all types of employer-employee disputes, including issues around notice periods and discrimination. Our expert lawyers and HR professionals will be able to guide you through the process and help you reach a favourable outcome.

It may be that an employee is attempting to intimidate you into giving them pay in lieu of notice so that they can get three months' salary without doing the work. If this is the case, we will be able to help you protect your business and ensure that the employee is held accountable to their notice period.

If you have any questions about three-month notice periods or how to deal with employees who are leaving, please do not hesitate to contact us for advice.

Should You Give Employees a Reference if They Don't Work Their Notice Period?

Some employers choose to give employees a reference even if they do not work their notice period, while others only give references to employees who have finished their notice period. There is no right or wrong answer and it really depends on your individual business's policies.

However, it is usually inadvisable to give negative references to employees who have left prematurely as this could potentially lead to legal action. Remember that an employee has the right to take you to court if they feel that they have been treated unfairly.

While you may ultimately be cleared of the allegations, it can still be a stressful, expensive process so you will need to decide whether it is better to just not give any reference.

Why is it Usually Better to Stay on Good Terms with Employees?

If your employee leaves on bad terms, it could be potentially very damaging for both of you. If you have an ex-employee who is angry or feels slighted, they may try to damage your business by spreading untrue rumours or warning people against working for you. They may also try to sue you for unfair dismissal, which can be a costly process.

If you feel like an employee has treated your company a little poorly or has caused minor issues by leaving, the best thing is usually to just draw a line under the situation and move on.

However, if an employee has seriously breached their contract or has left you in serious financial or operational difficulties when they left, get in touch with our expert lawyers and HR professionals and we will be able to advise you on what action to take.

Practical Steps to Take After Your Employee Hands in Their Notice

When an employee hands in their notice, there are a few practical steps that you need to take to ensure a smooth transition.

• First, make sure that your employee's last day is noted in your HR system and that their access to company systems or sensitive information is cancelled on that date. You should also remove them from any internal communication lists or social media groups.
• Second, you will need to arrange for all of your employee's belongings to be collected from their desk or office and that they hand back any company property. If they have any confidential information or materials, these must be returned to the company and securely destroyed or reassigned.
• Third, ask your employee to leave any instructions or information that will make their replacement's first few days easier. As long as you have a positive relationship with the departing employee, they should be happy to do so.
• Finally, you will need to finalise your employee's payroll and P45 details. Make sure you give your employee a copy of their P45 and any other documentation they may need for tax purposes.

Final Thoughts

It can be a difficult time when an employee decides to leave your company, particularly if they have been with you a long time or are a pivotal member of the team.

Make sure that you use their 3-month notice period to find a great replacement so that their absence will not be too sorely missed. If you have any issues with the employee refusing to work their notice or in some other way disrupting your business, get in touch with us at Neathouse Partners for expert legal and HR advice.