If you dismiss an employee and don’t give them their full notice you are more than likely to receive an irate request for the notice pay at best and an Employment Tribunal claim form through the post at worse. But what can you do if the shoe is on the other foot and an employee walks out without working their notice period for no good reason?
Employees are under a contractual duty to give minimum notice of resignation unless you have fundamentally breached their contract or you agree to waive the notice period. Even if no minimum notice period is specified in the contract any employee who has more than one month’s service is required to give at least one week’s notice, and of course many contracts require a longer period.
Obviously, if an employee fails to show up for work you do not have to pay them but you may still be left out of pocket due to loss of business or additional costs incurred in engaging agency staff.
Prevention is always better than the cure so having a notice period which is commensurate with the seniority of the role is always recommended. A three month notice period may be suitable for someone in a senior key position or a director but not someone in a junior role where one or two weeks’ notice would be more appropriate.
The best deterrent is to have contractual rights to guard against this possibility which should not only discourage employees from resigning without working the notice period but also give you an effective remedy if they do.
This normally takes the form of a contractual clause permitting the company to deduct from an employee’s final wages an amount from the employee’s final wages. This amount should not act as a penalty but as a means for the company to recover the amount of losses it will sustain as a result of the breach of contract. This could be loss of profit on cancelled jobs or additional wages costs due to overtime or agency rates. You should seek to pre-estimate what such losses would be and reflect this in the contract.
It has been common for company’s to state that the amount lost is the equivalent of one day’s pay; although this has held to be enforceable in one case the company was able to demonstrate why and therefore it is important that some form of assessment takes place.
Additionally you could also implement a contractual right to reduce the amount to be paid in respect of contractual annual leave on termination where the employee is dismissed for gross misconduct or resigns without giving proper notice.
It is important to note that if you do not have such a contractual right prior to the employee giving notice you could not make any deductions; it would amount to an unlawful deduction of wages for which the employee could sue and which would also prevent you from recovering any losses suffered using another legal remedy.
If the horse has already bolted you could sue the employee for breach of contract. The Courts almost certainly won’t compel the employee to work the notice period but they can award damages for any losses you suffered as a result of the breach.
Such damages would normally be for additional costs incurred arranging alternative staff (such as agency costs) and any loss of profit suffered as a result of the failure to work the notice period. How hard or easy it is to prove such loss will depend very much on the nature of your business and the job the employee did but in all circumstances you are under a duty to take reasonable steps to keep your losses to a minimum.
Making such a claim involves considerable time and expense so they are rarely pursued and therefore ensuring that your contracts of employment provide an effective remedy is the best way of ensuring an employee works the notice period.
By Guy Woodcock
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