Before considering any reduction of notice periods, it is necessary to consider notice periods in general. An employee’s notice entitlement should be set out in his or her contract of employment but, even if it is not, an employee will still be entitled to some form of notice - either statutory notice or “common law” notice.
Statutory minimum notice
The Minimum Notice and Terms of Employment Acts 1973-2005 (the “Acts”) set out a minimum period of notice which must be given by employers, with certain limited exceptions. The minimum notice period prescribed in the Acts is based on the length of the employee’s service with the employer, as follows:
- less than two years continuous service = one week;
- two years or more, but less than five years = two weeks;
- five years or more, but less than ten years = four weeks;
- ten years or more, but less than fifteen years = six weeks;
- fifteen years or more = eight weeks.
The Acts provide that employees are entitled to the longer of the minimum notice period prescribed in the Acts or the notice period provided by contract. An employer is not legally entitled to reduce the notice period to less than the minimum provided by the Acts. The Redundancy Payments Acts 1967-2007 also provide a minimum period of two weeks’ notice of any dismissal by reason of redundancy. Such notice runs concurrently with the minimum notice provided for in the Acts.
Reasonable or common law notice
In the absence of a notice period in the contract of employment, an employer is legally obliged to give an employee “reasonable” notice, which is often referred to as "common law" notice. In the context of legal proceedings, a term to this effect will be implied into the contract by the Court which will involve looking at issues such as the employee’s position and role in the organisation, age and experience, level of responsibility, length of service and custom and practice. This is particularly relevant in the case of senior executives, as employees in senior positions can be entitled to significant notice periods. For example, “reasonable” notice was held to be six months in the case of McCarthy –v- Breeo Foods Limited [2010 ELR 53] and 12 months in the case of Lyons -v- MF Kent & Co (International) Ltd (In Liquidation) [1996 ELR 103].
When can the notice period be reduced?
Where a notice period is provided for in a contract of employment, an employer may either obtain the employee’s express agreement to the reduction or attempt to impose the change unilaterally. However, the unilateral variation of an employee’s notice period may give rise to a claim for breach of contract, constructive dismissal or a claim under the Payment of Wages Act 1991.
In recent times, some employers have been unable to afford to pay lengthy notice periods in redundancy situations. If an employee is dismissed and not paid his or her notice he or she may look to claim statutory, contractual or common law notice depending on the particular circumstances and the notice provision contained in the contract of employment.
Employers should ensure that all contracts of employment provide for a reduced notice period to be provided by the employer during the probationary period. However, as stated above, the notice period to be provided during the probationary period cannot be any shorter than the statutory minimum notice provided for in the Acts. If, for example, the probationary period is 12 months, employers should ensure that the probationary employee is reviewed well in advance of the expiry of the probationary period so that if the employment is not be continued beyond the probationary period, the employee will not have accrued 12 months’ service and will not come within the ambit of the Unfair Dismissals Acts 1977-2008.
Payment in lieu of notice (PILON) clause
In some cases, employers do not wish the employee to work his or her notice and would prefer to pay the employee “in lieu” of the notice period, without requiring him or her to work that notice. A PILON clause in the contract of employment enables an employer to do so without being in breach of contract.
While payment in lieu of notice is not necessarily a means to reduce the notice payable it is a means to reduce the amount of notice the employee is entitled to work and this may suit certain employers in circumstances where the employee is leaving on bad terms or where no work is available in redundancy situations. However, employers need to be aware that if a PILON clause is not included in the contract, the employer cannot lawfully insist upon the employee being paid in lieu of notice without the employee's consent.
Employee reducing notice
Section 6 of the Acts provides that an employer is entitled to not less than one week’s notice of termination of employment where the employee has been in the employer’s continuous employment for 13 weeks or more. The contract of employment may provide for a longer period of notice to be provided by the employee if he/she wishes to leave. However, the employer has limited means to enforce a notice period if an employee refuses to work that period. The Acts do not provide any sanction for a breach of section 6 by the employee and while it is open to an employer to institute proceedings against the employee in respect of the matter, unless there is a lengthy notice period involved, the merits of issuing any such proceedings are questionable.
If, however, the dismissal is for reasons of redundancy, the Redundancy Payments Acts provide that the employer may refuse to make the statutory redundancy payment to the employee where the employee unreasonably refuses to work out the required notice, as requested by the employer.
Employers should always include provision for notice in contracts of employment and notice provisions should be tailored to each employee. The notice period that applies to each employee (and whether the employer can pay in lieu of notice) should be made clear to avoid any ambiguity when the employment relationship comes to an end.
There are limited circumstances where an employer is not obliged to pay notice – to include a situation where the employee is guilty of misconduct, but any such right should be clearly provided for in the contract of employment.