Statutory Notice Period Explained [Employee Guide]

Introduction to statutory notice period

When you leave a job – whether by resignation, redundancy, or dismissal – one area that often causes confusion is the statutory notice period. In some situations, especially if you’re being offered a settlement agreement, your notice period may be handled differently.

In this guide, we explain:

• What the statutory notice period is
• What you can expect in terms of pay
• How the statutory notice applies in different situations
• How settlement agreements can shape your notice period and final pay
• And more.

What is the statutory notice period?

The statutory notice period refers to the minimum amount of notice that either an employer or an employee must give when ending employment. These periods are set out by UK employment law and apply to most workers, regardless of what their contract says.

Statutory notice period UK: The basics

For employers, the required notice period increases depending on how long the employee has worked for them.

• Less than one month: No notice required (unless contractually agreed otherwise)
• One month to less than two years: At least one week’s notice
• Two years or more: One week’s notice for each year of service, up to a maximum of 12 weeks.

For employees, the legal minimum is always one week if they’ve been employed for one month or more (unless the contract requires more).

What is statutory notice pay?

Sometimes, instead of asking you to work your notice period, your employer may choose to end your employment straight away and pay you for that time instead. This is known as payment in lieu of notice (PILON).

This pay must reflect your usual earnings, including your regular wages and any benefits you would typically receive, such as pension contributions, company car allowance, or private health cover.

How statutory notice pay works:

• If your hours vary from week to week, your statutory notice pay should be based on your average salary over the previous 12 weeks.
• If you have fixed hours and pay, it should be based on your standard salary.

It’s important to note that statutory notice pay is separate from redundancy pay. If you’re being made redundant, you’re usually entitled to both.

Contractual vs statutory notice period

It’s important to distinguish between contractual and statutory notice, as your employment contract may set out a longer notice period than the statutory minimum.

In that case, the contractual notice applies. However, it cannot be shorter than the statutory notice period.

When the employer ends the employment contract

If your employer is ending your employment:

• They must give you at least the statutory minimum notice period, or more if it’s stated in your contract
• They can ask you to work your notice or, in some cases, choose to pay you instead
• If they wish to end the relationship immediately, they should pay you in lieu of notice (PILON)
• Unless a valid PILON clause is written into your contract, your employer cannot automatically opt to pay you instead of giving notice. Doing so without your agreement could be a breach of contract
• If a PILON clause is included in your contract, or if you decide to accept PILON, you’ll receive a lump sum equal to what you would have earned had you worked during your notice period. This should include your regular wages, pension contributions, and any benefits you’d normally receive.

Your employer may also offer a settlement agreement as part of ending your employment. This is a legally binding contract that usually includes terms around your notice period, final pay, and any additional compensation (ex-gratia payment).

If you’re offered a settlement agreement, you must get independent legal advice before signing (we offer a same-day service, and your employer covers the legal fee).

When the employee resigns

If you decide to resign, the notice you must give depends on what’s stated in your contract. However, if there is no contract or the contract is silent on this issue, the statutory notice period applies. Under this, employees must give at least one week’s notice if you’ve been employed for more than a month. This doesn’t increase with length of service.

It’s worth noting that failing to give proper notice can be a breach of contract, which may affect final payments or references.

Redundancy and the statutory notice period

When you are made redundant, you are entitled to work your notice period or receive notice pay, in addition to any statutory redundancy pay you qualify for. The same statutory notice periods apply depending on your length of service.

Sometimes, employers handling redundancies will offer a settlement agreement. This can provide clarity and certainty for both sides, especially if you’re agreeing to leave sooner or being compensated in a particular way. It’s a legally binding document that must be reviewed by an independent solicitor to be valid.

In practical terms, this means you’re entitled to:

• Your notice pay – whether you work your notice period or your employer pays you in lieu
• Any accrued holiday pay
• Your statutory redundancy payment.

Redundancy pay is always on top of your notice pay, not instead of it.

Special situations during statutory notice period

While the statutory notice period rules are straightforward in most cases, there are a few situations where things can work slightly differently in practice. These special circumstances, such as garden leave or payment in lieu of notice, can affect whether you work your notice, how you’re paid, and when your employment officially ends.

Here’s what you need to know:

Garden leave
Sometimes an employer will place an employee on “garden leave,” meaning you do not need to work during the notice period, but you remain on the payroll. This counts as being employed, and you should receive full pay and benefits.

Payment in lieu of notice (PILON)
If your contract allows for PILON, or if you agree to it, your employer may terminate your employment immediately and pay you the equivalent of your notice period. This is often used to protect sensitive business interests.

Your rights during the notice period

Your notice period isn’t just a formality; it’s a protected stage of your employment where your rights remain fully in place. Whether you’re working your notice or not, the law ensures you continue to receive fair treatment.

From pay and benefits to holiday entitlement and time off for interviews, here’s what you’re entitled to during this time:

• You are entitled to your full pay and benefits
• You continue to accrue holiday entitlement
• You may use any remaining annual leave (subject to approval)
• You can request time off to attend job interviews (if you’ve been made redundant).

If your employer fails to provide the correct notice or pay, you can make a claim to an employment tribunal.

What happens if you’re on holiday during your notice period?

If you have annual leave remaining, you can usually take it during your notice period, either as agreed with your employer or if your employer requires you to. If you’re unable to take the leave, your employer must pay you for any unused holiday at the end of your employment.

If your employer wants you to take your holiday during your notice, they must give you the right amount of notice: at least twice as many days’ notice as the number of days they want you to take. For example, two weeks’ notice to take one week of holiday.

If you’re off sick during your notice period

Being off sick doesn’t cancel your notice period. If you’re unwell and unable to work during this time, you’re still entitled to either your usual pay or Statutory Sick Pay (SSP), depending on your situation. If your employer chooses to pay you in lieu of notice, your health status doesn’t change your entitlement – you should still receive the full amount.

Employees with less than one month’s service

If you’ve been employed for less than one month, you don’t qualify for the statutory notice period. However, check your contract – some employers offer contractual notice from day one. Even if statutory notice doesn’t apply, your employer must still act fairly and lawfully when ending your employment.

Settlement agreements and your notice period

A settlement agreement can be used to finalise the terms of your departure, including how your notice period and pay is handled. Whether you’re being made redundant or leaving under other circumstances, a settlement agreement can give both parties a clean and legally binding conclusion.

Statutory notice pay – FAQ’s

This section answers some of the most common queries employees have about statutory notice periods, notice pay, and your rights during this time.

Contact our Settlement Agreement Solicitors today

If you’ve been offered a settlement agreement, we’ll make sure your notice period is managed in a fair and financially secure way.Offering a nationwide service, we support employees across the country including London, Manchester, Birmingham and the Home Counties.

At GTE Settlement Agreement Solicitors, we offer:

• Same-day legal advice and sign-off
• A calm, straightforward process
• Reassurance that your agreement is fair and legally sound
• No cost to you (your employer covers our legal fees)

If you’re ready to sign a settlement agreement, call us today on 020 7247 7190. Our same-day service means you can get expert legal advice quickly at no cost to you. Whether you are resigning, being made redundant, or dismissed, we’ll help you navigate the situation with confidence.