The statutory notice period that employees (and employers) are required to give to end the employment depends on how long the employee has been employed. Once an employee has been employed for a month, the statutory minimum notice period they are required to give of their resignation is one week. This isn’t much time, so typically, the employment contract will require a longer period of contractual notice to be given for longer-serving employees.
Difficulties may arise where an employee gives less than the required notice to their employer and the employer has no-one to cover their work. The employer’s options in this situation are to:
- Agree with the employee that they leave their employment without working out their notice period. In that case, the employment will end on the last day they work. It may cause less nuisance to the employer to permit an employee who is disgruntled or is no longer productive to leave work sooner; or it may simply be better to agree this to end the employment on an amicable basis. If a waiver of notice is agreed, ensure this is recorded in writing for evidential purposes.
- Persuade the employee that if they do not work out their notice, this places them in breach of contract and the employer may take legal action in that scenario for their financial loss, if any.
Despite an employee being in breach of contract, the employer may not necessarily have suffered any financial loss as a direct result of the employee’s breach; or it may simply not be worth the time, cost and trouble of pursuing the employee for the financial loss. Employers should bear in mind that despite the typical disruption and difficulty for the business of an employee failing to work out their notice period where this has not been agreed, most often employers will not have incurred additional costs as a result of the employee’s breach of contract. This is because, where an employee leaves their employment early, the employer only has to pay them for the time that they've worked. Examples of actual financial loss would be where the employer has incurred extra costs than they otherwise would have done as a direct result of the employer’s failure to give the required statutory or contract notice of their resignation (such as taking on agency staff at a higher rate of pay, or having to pay existing staff overtime rates to cover the work during what would have been the employee’s notice period). Employers are entitled to claim damages for actual losses caused directly by the employee’s breach of contract, but the law does not permit the recovery of damages which simply aim to punish the individual for breaching the contract; rather than reflecting the actual financial loss.
See for example the template ‘letter to employee who has failed to provide required notice of resignation’ on the FSB Legal and Business Hub. See also the ACAS guidance on Leaving without working notice.
How do you calculate the loss?
An employee who leaves employment without working out their full notice won’t of course be entitled to notice pay for any of the unworked period. The employer will need to ascertain if it has suffered a loss which is directly attributable to the employee leaving their employment early, such as the employer incurring agency fees to find a replacement quickly, or temporarily; or needing to pay existing staff overtime rates which are additional to the cost that the employer would have paid to the employee had they worked out their notice.
How do you recuperate the loss?
In this situation, the employer may decide to recover the cost as a loss in a breach of contract claim by bring a money claim against the employee/ex-employee in the county court. These types of claims are usually small, unless the employer has suffered a substantial financial loss (such as being unable to complete a client project, or losing a key client or high-value contract, in the case of a sudden departure of an employee with specialist skills or an employee in a senior position). Both evidence of the loss itself and evidence of the connection (causation) between the employee leaving without notice and the occurrence of the financial loss will be needed to support the claim. Where the employer wins the claim, court fees (although in a small-value claim, not other legal fees, such as the cost of using a solicitor) can be recovered from the losing party. Employers should also weigh up the risk that the ex-employee may simply not pay any resulting County Court Judgment (CCJ), meaning the additional time, cost and trouble of taking enforcement action to enforce the CCJ.
Employers must not withhold pay unlawfully, but where the employee is owed wages, or holiday pay, the employer may be able to recover their loss from the outstanding wages if there is a suitable clause in the employment contract that permits recovery of the employer’s losses from the employee’s outstanding wages and it is drafted correctly to permit recovery via this method. Employers must not withhold the employee’s P45 once the employee has left their employment.
What about if the employee is going to work for a competitor?
If the concern is preventing the employee from working elsewhere during the notice period, the employer may place the employee on garden leave, provided that the contract of employment allows this.
In the event that an employee is seeking to leave employment without giving the required notice in order to start work for a competitor, in theory the employer could pursue proceedings to obtain an injunction requiring the employee to comply with the notice period in order that the employee be placed on garden leave to help protect the employer’s confidential information. However, such court proceedings are likely to be costly and time intensive, meaning they are rarely worth pursuing unless, for example, it is a senior or key employee who is vital to the business and is likely to have access to company confidential information. Additionally, the employment contract may contain restrictive covenants which last after the employment has ended, such as confidentiality clauses or non-competition clauses, which the employer may need to enforce.
In summary, while you can’t stop an employee from walking out early, you can protect your business through:
- Enforceable contract terms.
- Reasonable deductions from wages, where the employment contract permits this (FSB members should take legal advice via the FSB Legal Advice Line before doing so).
- Civil remedies through the county courts where losses are significant.
FSB members can find template letters and guidance in the employment section of the Legal and Business Hub and should contact the FSB Legal Advice Line for legal advice.