Notice Periods When Made Redundant

When you are made redundant, you are entitled to a notice period before your employment ends. This is separate from your redundancy pay and gives you time to prepare, look for new work and plan your finances. Understanding your notice period rights is essential because the pay you receive during this time is often a significant part of your total leaving package.

This guide covers statutory notice periods, contractual notice, how pay works during notice, garden leave, and what happens if your employer wants you to leave immediately.

Statutory Notice Periods

Every employee in the UK has a legal right to a minimum notice period, set by the Employment Rights Act 1996. The statutory minimum depends on your length of continuous service:

For example, if you have been employed for 7 years, your statutory minimum notice period is 7 weeks. If you have worked for 15 years, it is capped at 12 weeks.

The statutory minimum applies from the first day of employment for notice purposes, but you only need one month of service before any notice is required at all. During the first month of employment, the employer can dismiss without any statutory notice.

Contractual vs Statutory Notice

Your contract of employment may specify a notice period that is longer than the statutory minimum. This is very common, particularly for professional, managerial and senior roles where three or six months' notice is typical. Some senior positions carry notice periods of 12 months or more.

The rule is straightforward: you are entitled to whichever is longer -- the statutory minimum or the contractual notice period. Your employer cannot use the statutory minimum to override a longer contractual notice period.

Examples

• Contract says 1 month, service is 5 years: Statutory minimum is 5 weeks. Since 5 weeks is longer than 1 month (approximately 4.3 weeks), you are entitled to 5 weeks' notice.
• Contract says 3 months, service is 5 years: Statutory minimum is 5 weeks. Since 3 months (approximately 13 weeks) is longer, you are entitled to 3 months' notice.
• Contract says 3 months, service is 15 years: Statutory minimum is 12 weeks. Since 3 months is approximately 13 weeks, you are entitled to 3 months' notice.

If your contract does not mention a notice period at all, you are entitled to the statutory minimum. If your contract states a notice period that is shorter than the statutory minimum, the statutory minimum overrides it because you cannot contract out of statutory rights.

Pay During Your Notice Period

During your notice period, you are entitled to your normal pay and benefits. This means:

• Basic salary continues as normal.
• Regular contractual payments such as shift allowances, London weighting or car allowances should continue.
• Pension contributions: Your employer should continue making contributions during the notice period.
• Benefits in kind such as private medical insurance, company car and other contractual benefits should remain in place.

Notice pay is treated as normal earnings for tax purposes. It is subject to income tax and National Insurance through PAYE. It does not count towards the £30000 tax-free redundancy threshold.

Sick Pay During Notice

If you fall ill during your statutory notice period, you are entitled to your full normal pay, not just statutory sick pay (SSP). This protection applies for the statutory notice period only. If your contractual notice period is longer than the statutory minimum, your employer can pay SSP for the contractual element beyond the statutory minimum, depending on the terms of your contract.

Garden Leave

Garden leave is an arrangement where your employer instructs you not to attend work during your notice period while continuing to pay you in full. The term comes from the idea that you are at home tending your garden, though in practice you are simply staying away from the workplace.

During garden leave:

• You remain an employee of the company and your contract is still in force.
• You receive your full pay and contractual benefits.
• You are bound by all contractual obligations, including confidentiality, non-solicitation and non-compete clauses.
• You usually cannot start a new job until your notice period ends, unless your employer agrees otherwise.
• You continue to accrue holiday entitlement.

Employers commonly use garden leave when they want to protect sensitive business information, prevent you from having contact with clients or colleagues, or simply because there is no meaningful work for you to do during the notice period. Your employer needs either a garden leave clause in your contract or your agreement to place you on garden leave.

Pay in Lieu of Notice (PILON)

Instead of requiring you to work your notice period (or placing you on garden leave), your employer may choose to make a payment in lieu of notice (PILON). This means your employment ends immediately and you receive a lump sum representing the pay you would have earned during the notice period.

There are two main scenarios:

• Contractual PILON: Your contract contains a clause allowing the employer to end employment immediately by making a payment instead of notice. This is a contractual right and the payment is always taxable as earnings.
• Non-contractual PILON: Your contract does not contain a PILON clause, but your employer chooses to pay you off rather than have you work notice. Since April 2018, this is also treated as taxable earnings under the post-employment notice pay (PENP) rules.

In both cases, PILON is separate from your redundancy pay. You should receive your full redundancy pay in addition to the payment in lieu of notice.

Working During Your Notice Period

If you work through your notice period as normal, you should be aware of these additional rights:

• Time off to look for work: If you have 2 or more years of continuous service, you have a statutory right to reasonable paid time off during working hours to look for new employment or arrange training. The amount of time off is what is "reasonable" in the circumstances, up to a maximum of 40% of a week's pay.
• Holiday: You continue to accrue holiday during your notice period. Your employer may ask you to take any outstanding holiday during notice, provided they give you adequate notice to do so (at least twice the length of the holiday to be taken).
• Redundancy pay: Working your notice period does not affect your redundancy pay. You are entitled to both.

What If Your Employer Does Not Give Proper Notice?

If your employer terminates your employment without giving you the correct notice and without making a payment in lieu, this is a breach of contract. You can bring a claim for wrongful dismissal (breach of contract) to recover the pay you should have received during the notice period.

Wrongful dismissal claims can be brought in an employment tribunal (for amounts up to £25,000) or in the county court (for larger amounts). The claim is for the net pay you would have received during the notice period, after deducting tax, National Insurance and any earnings from new employment during that period.

If your employer is insolvent and cannot pay your notice entitlement, you may be able to claim from the National Insurance Fund through the Redundancy Payments Service. This covers unpaid notice pay up to 8 weeks, subject to the weekly pay cap of £719 (£749 in Northern Ireland).

Notice Period and Redundancy Pay: Separate Entitlements

A crucial point that is often misunderstood: your notice period and your redundancy pay are completely separate entitlements. You are legally entitled to both. Your employer cannot reduce your redundancy pay by the amount of notice pay, or vice versa, unless your contract specifically allows this (which is rare and potentially unenforceable for statutory redundancy pay).

Use our notice period calculator to work out exactly how many weeks' statutory notice you are entitled to, then use the main redundancy pay calculator to calculate your statutory redundancy entitlement separately.