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Know Your Notice Periods

Published 20 Sep 2020

The main purpose of a notice period for an employer, is to allow the employer time to replace the employee that resigned, without losing production.

Notice for an employee on the other hand, is to give the employee the opportunity to secure employment elsewhere, without placing too much financial strain on the employee.

In an ideal world, this would work perfectly, but in reality, this mostly becomes messy as you have either party wishing to end the employment relationship, but is being forced to remain in the status quo for a certain period.
The law is not prescribing a set time period for notice, except for saying it must be reasonable and/or agreed on. We recommend having the different notice periods stipulated in Schedule 1 of the Employment Agreement. This way it is clear and agreed upon, once the IEA is signed. The time period for the notice can be anything that works for the employer – 1 week, 2 weeks, 3 weeks, etc.

The three main notice periods are,
1. Resignation notice;
2. Redundancy notice; and
3. Termination notice.

Resignation notice is the period of time that the employee must give the employer to allow the employer to replace the resigning employee. When determining this period, keep in mind that you have an employee that is ending the employment relationship. Trying to force them to stay on for another 4 weeks, might be detrimental to your business.

Redundancy notice is the period of time the employer allows the affected employee/s to secure alternative employment. Because redundancy is a no fault termination, we always recommend to allow a bit more time for this notice period.
Redundancy notice is often confused with redundancy pay. Notice is the period that the employee must continue to work as an employee for the employer, where redundancy pay is an ex gracia or bonus amount to thank an employee for their service. Notice pay is compulsory, whereas redundancy pay is not.

Termination notice is the period of time the employer allows the employee to secure new employment when the employer terminates employment. When an employee is found guilty of and subsequently terminated for serious misconduct, termination can be summary and therefore without notice and/or pay.

  • Should you not have a stipulated notice period in your agreements and the employment relationship comes to an end, you have to try and negotiate and agree on a notice period. If this is not possible, you have to use a notice period that is deemed fair and reasonable. In a case like this, the courts normally apply notice equivalent to a normal pay cycle. 
  • When you have the clause in the Employment Agreement, the employer can elect to pay the employee his/her notice period in lieu, meaning they don’t have to work out their notice. This is helpful, especially if you have an employee that is being disruptive and causing problems during the notice period.
  • An employee can request not to work out their notice, but the employer ultimately has to agree to this. If the employer doesn’t agree and the employee just doesn’t work, it would be unpaid.
  • By agreement, the notice period can be shortened or partially worked and the remainder paid out.
  • Annual leave cannot run concurrent with any notice period. Both are entitlements and should be kept separate.
  • Sick leave can be taken during notice period.
  • Disciplinary action can also be taken during a notice period. The employee, even whilst working out his/her notice, is still an employee of the company and has to abide by the rules and regulations, even if they have resigned or were terminated.

We recommend having the following notice periods, as a guideline only;

  • Resignation notice: 2 weeks
  • Termination notice: 1 week
  • Redundancy notice: 4 weeks