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The Difference Between Contractual and Statutory Notice - An Explanation for Employers

Contractual and Statutory Notice

Notice is usually required in order to lawfully terminate a contract of employment. A failure by either employer or employee to give the required notice is likely to constitute a breach of contract.

Statutory Notice Requirements

Section 86 of the Employment Rights Act 1996 imposes a statutory obligation on the employer and the employee to give notice of termination, which is known as the statutory minimum notice period.  It states tha;

The employee is required to give a week’s notice to the employer.

The employer is required to give notice based on a scale depending on the employee’s length of service. The notice to be given is one week’s notice if the period of continuous employment is less than two years. And then at least a week’s notice for each year of continuous employment in excess of two years must be given up to a maximum of 12 weeks.

Contractual Notice

Notice periods are usually determined by what the employer and employee have agreed and recorded in the written contract of employment and this should always be advised in order to reduce the risk of any disputes of the matter. The statutory minimum notice period of one week required by an employee to give an employer of their intention to terminate the contract of employment will seldom be sufficient. An employer can therefore ensure that a longer notice period is stated in the contract so that the employee is obliged to give more than a weeks notice. The employer may require more time to, for example, recruit and train a suitable replacement for the employee and so it is more usual for more senior, qualified and skilled employees to be under a contractual obligation to give a period of notice to their employer that exceeds the statutory minimum more than junior, less qualified and less skilled employees as more time will be needed for the recruitment and training of more skilled employees. It should be noted however that a court will not enforce a contractual notice clause which is less than the statutory requirement (unless either party have waived their right).

Considerations For Employers

Employers should be aware of the potential issues which could result in increasing the statutory notice period required by them to give their employees. In the circumstances where an employer gives an employee notice of termination of their employment, there is potential for the employee to become bitter towards their employer, lack motivation and not be adverse to causing problems. Even if an employer were to decide it would be best to pay the employee in lieu of notice instead, obviously the longer the notice period, the greater the financial loss. Again, an employer will be unable to enforce a notice period required by themselves which is less than the statutory minimum. It would appear that the statutory position were to favour long serving employees most.

The absence of an express contractual term requiring the giving of notice does not mean that there is no requirement to give notice. In these circumstances there will be an implied term to give reasonable notice.

 In terms of how the contractual notice and statutory notice relate to each other, if a longer period is specified in a contract (or it can be inferred from the individual circumstances), then that would usually prevail over the statutory minimum period. Also where there are any contractual terms specifying the procedure for giving notice, these will apply even though such requirements are absent from the statutory obligations concerning notice periods.

To conclude, the difference between contractual and statutory notice is that statutory notice is stated in legislation by means of Section 86 of the Employment Rights Act 1996, whereas contractual notice is stated in an employees contract of employment and as long as it is equal to or greater than the statutory minimum period, the contractual notice will be enforceable and will prevail. 

How EmployEasily Legal Services Can Help Employers

Employers concerned about their current notice obligations / arrangements can take advantage of EmployEasily Legal Services free consultation service - contact us today to arrange your free consultation.

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