Notice and Severance
Notice Requirement
Sec. 86 of ERA establishes minimum notice periods according to the length of service, as follows:
- one week, if the employee has been continuously employed for at least 1 month but less than two years;
- one week for each year of continuous employment if the period of continuous employment is between two and 12 years and
- 12 weeks if the period of continuous employment is 12 years or more.
No notice needs to be given if the employee has been employed for less than 1 month. There is no statutory right to pay in lieu of notice. However, a pay in lieu of notice clause can be inserted in the employment contract or it may be paid to cover any potential damages for breach of contract.
Source: §108 of the Employment Rights Act (ERA), 1996
Severance Pay
According to UK legislation, there is no statutory severance pay in the event of non-economic dismissals. The Employment Right Act 1996 only provides for a statutory termination payment in the event of redundancies. Employees are entitled to redundancy payment provided that they have been continuously employed for at least two years with the same employer. The number of weeks’ pay due depends on the age of employee, the length of service, and is to be calculated, as follows:
- 0.5 week's pay for each year of service where the employee was below the age of 22;
- 1 week's pay for each year of service where the employee was between 22 to 40 of age;
- 1.5 week's pay for each year of employment where the employee was 41 and over.
For the purposes of calculating redundancy payment, the weekly pay is capped at £489. With effect from 6 April 2016, the maximum amount payable is £14,670, but such maximum limit is increased annually.
Small Employers with less than ten employees may directly consult employees affected concerning entitlement of redundancies where no appropriate representatives exist or where the employers have not invited any affected employees to elect representatives on their behalf. The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014 (SI 2014/16)
Source: §135, 155 & 162 of the Employment Rights Act (ERA), 1996; Schedule to the Employment Rights (Increase of Limits) Order 2011
