The person who understood how everything worked resigned on a Monday and left the following Monday. Not out of spite — they had a new job starting and asked, reasonably, what notice they had to give. Somebody looked at the contract, a two-page document adapted from a template four years earlier, and found the phrase "notice as per the statutory minimum".
The statutory minimum, for a resigning employee, is one week. It is one week if they have been with you eighteen months and it is one week if they have been with you eleven years. Everything longer than that has to be written into the contract, and if it is not written down, it does not exist.
The statutory minimums are asymmetric, and the asymmetry is not in your favour
The notice an employer must give scales with service. Once someone has been continuously employed for a month, you owe at least one week's notice up to two years' service; then one week for each complete year from two years to twelve; then a flat minimum of twelve weeks once they hit twelve years or more.
The notice an employee must give does not scale at all. Once they have been employed for more than a month, it is one week. That is the floor and, absent a contract term, it is also the ceiling.
Take an employee on £42,000 with six years' service. If you dismiss them, statutory notice is six weeks — about £4,846 of notice pay if you pay it rather than work it. If they resign, you get one week and a handover squeezed into five working days. The asymmetry is deliberate, and it is not unfair; it is simply the deal. But it means the handover risk sits entirely with you unless you wrote something different into the contract at the point when nobody was thinking about anyone leaving.
Notice is the only clause in an employment contract that matters exclusively on the way out. Which is precisely why nobody negotiates it on the way in.
Longer notice cuts both ways
The obvious fix is to write longer notice into contracts, and for genuinely knowledge-critical roles that is the right answer. Just be clear about what you are signing up to, because contractual notice is mutual. Put three months in the contract and you owe three months as well — on dismissal, on redundancy, and on the day you decide the hire was a mistake and would rather they left immediately.
In practice, one month for most roles and two or three for senior or specialist ones is the honest compromise. Do not put six months into a contract you could not afford to pay out on a bad quarter, and do not change existing contracts unilaterally: varying a term needs agreement, and imposing it is how a straightforward change becomes a dispute. Nor does longer notice do the job people imagine it does on competition — that is what restrictive covenants are for, and they have their own rules.
Garden leave needs a clause
Garden leave means keeping someone employed and paid through their notice while keeping them away from the business, the systems and the customers. It is the standard answer when a salesperson resigns to join a competitor.
It needs an express clause. Without one, sending someone home for three months can itself be a breach of contract, particularly where the employee needs to work to earn commission or to maintain a skill or professional standing. And a breach by you can release the employee from their post-termination restrictions — which is the exact opposite of what garden leave was meant to achieve. If you want the option, put it in the contract before you need it.
Payment in lieu of notice needs a clause too, and it is not tax-free
A payment in lieu of notice clause lets you pay the notice period and end the employment immediately. Without such a clause, terminating early and paying up is technically a breach of contract. Employees often accept it and nothing happens; sometimes they do not, and once again a breach can undermine the covenants you were relying on.
The tax position is where people are most often out of date. Since April 2018, the post-employment notice pay rules mean the element of any termination payment representing basic pay for the notice period is taxed as general earnings and is subject to Class 1 National Insurance — whether or not there is a PILON clause in the contract. The old approach of dressing notice pay up as compensation and sheltering it under the £30,000 exemption no longer works. Budget for notice as a gross cost with employer's National Insurance on top, not as a tax-free settlement.
What if they simply walk out?
You cannot compel anybody to work their notice. If someone leaves without giving it, your remedy is a claim for damages for breach of contract, which means proving actual loss and is almost never economic for a week or a month of notice. Some contracts purport to allow a deduction from final pay; that territory invites an unlawful deduction from wages claim, and it is worth taking advice before you withhold anything rather than after.
Which is the honest conclusion here. The legal question — how much notice am I owed — has a clean answer and very little practical remedy behind it. The operational question is the one that actually hurt.
What to do this week
Read your contracts and write down the notice period for each role. Most owners genuinely cannot say what theirs are, and the answer is either reassuring or worth fixing at the next contract review.
For each role, ask what a real handover requires. If the answer is "three weeks with the person who knows the system", then a one-week notice period is a risk you have accepted without deciding to.
Build a leaver checklist now, while nothing is happening: system access and passwords, bank mandate signatories, the client list and who owns each relationship, supplier account logins, the recurring jobs only they do, and the things that exist nowhere except in their head. Running it as part of a proper exit interview turns a scramble into a process.
And treat the week as the symptom rather than the disease. It hurt because one person held knowledge nobody else had, which is a single point of failure that would have bitten just as hard through illness, a family emergency or a lottery win. The notice period is a contract term you can fix in an afternoon. Building a business that does not depend on any one person being there is the longer job, and it is the one that actually solves this.
Common questions
How much notice does an employee legally have to give?
One week, once they have been continuously employed for more than one month — and that does not increase with length of service. An employee with eleven years' service owes the same statutory week as one with eighteen months. Anything longer must be written into the employment contract; if the contract is silent, or simply says notice is the statutory minimum, one week is what you get. The position for employers is different and does scale with service: at least one week up to two years, then one week per complete year from two to twelve years, and a minimum of twelve weeks after twelve years.
Can I make an employee work their full notice period?
Not in any practical sense. You cannot compel someone to attend work, and if they leave early your remedy is a claim for damages for breach of contract, which requires proving actual financial loss and is rarely worth pursuing for a week or a month. Some contracts include a term allowing a deduction from final pay for unworked notice, but relying on it risks an unlawful deduction from wages claim, so take advice before withholding anything. In most cases the sensible response is to negotiate what handover you can get in the time available and document what only that person knows.
Do I need a garden leave clause in my contracts?
You need one if you ever want to use garden leave. Keeping an employee employed and paid but away from the business, its systems and its customers during their notice requires an express contractual right. Without a clause, sending someone home can itself be a breach of contract, especially where they need to work to earn commission or to maintain a skill or professional standing — and a breach by the employer can release the employee from post-termination restrictive covenants, defeating the point. It costs nothing to include the clause when contracts are drafted, and it cannot be added afterwards without agreement.
Is payment in lieu of notice tax-free?
No. Since April 2018 the post-employment notice pay rules mean that the part of a termination payment representing basic pay for the notice period is taxed as general earnings and attracts Class 1 National Insurance, regardless of whether the contract contains a payment in lieu of notice clause. The older practice of characterising notice pay as compensation to bring it within the £30,000 exemption no longer works for that element. Budget for it as a gross employment cost with employer's National Insurance on top. Separately, making a payment in lieu without a contractual clause is technically a breach of contract, which can undermine restrictive covenants.
