What is Notice Period?

Full Definition

A notice period is the amount of time that must pass between either the employer or the employee giving notice to end the employment relationship, and the employment actually ending. UK law sets a statutory minimum notice period that scales with length of service: at least one week's notice after one month's service, rising to one week for each complete year of service up to a maximum of 12 weeks for an employee with 12 or more years' service (this statutory minimum applies to notice the employer must give; an employee need only give one week's statutory minimum notice regardless of length of service, unless their contract specifies more). Many employment contracts set a longer notice period than the statutory minimum -- particularly for more senior roles, where three, six, or even twelve months' notice is common -- and where a contract specifies a longer period than the statutory minimum, the contractual notice period applies instead, since it cannot be shorter than the legal minimum but can be longer. Rather than working through the full notice period, an employer and employee can agree to a payment in lieu of notice (PILON), where the employment ends immediately and the employee receives a payment equivalent to the salary (and sometimes benefits) they would have earned during the notice period instead of actually working it; whether PILON is available, and how it is taxed, generally depends on whether the employment contract contains a specific PILON clause.

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