What Are Employee Rights During A Notice Period?

Employee rights during a notice period refer to the legal entitlements and protections an employee has after receiving notice of termination or after resigning, but before their employment officially ends. In England and Wales, the notice period is a legally significant stage of employment where the employment contract remains in force and both parties must continue to comply with contractual and statutory obligations.

These rights arise mainly from the Employment Rights Act 1996, employment contract terms, and common law principles. The notice period is not a suspension of employment; it is a continuation of the employment relationship with specific legal protections.

Legal Framework Governing Notice Period Rights

Employee rights during a notice period are governed by:

• Employment Rights Act 1996 (statutory notice and pay rights)
• Employment contract terms (contractual notice and benefits)
• Working Time Regulations 1998 (holiday entitlement and rest rights)
• Common law contract principles
• Case law on notice pay and implied contractual terms

Together, these sources define what an employer can and cannot do during notice.

What Is a Notice Period?

A notice period is the time between:

• The employer giving notice of termination, or
• The employee resigning, and
• The final termination date of employment

During this period, the employment contract remains active unless the employer pays in lieu of notice (PILON) or the employee is placed on garden leave.

Core Employee Rights During a Notice Period

1. Right to full pay and benefits

Employees are entitled to:

• Normal salary
• Contractual benefits (e.g. pension contributions, healthcare, bonuses where applicable)
• Accrued overtime or commission if contractually due

If employment continues during notice, pay must remain unchanged unless agreed otherwise.

2. Right to statutory or contractual notice

Employees are entitled to whichever is greater:

• Statutory minimum notice under the Employment Rights Act 1996
• Contractual notice if longer

Statutory minimum notice is:

• At least 1 week after 1 month of employment
• 1 week per year of service (up to 12 weeks maximum)

3. Right to accrue holiday pay

During the notice period:

• Holiday continues to accrue
• Employees may take holiday if agreed
• Unused holiday must be paid on termination

Employers can require employees to take leave during notice if proper notice is given, depending on contract terms.

4. Right to work or be placed on garden leave

Employees may:

• Continue working normally
• Be placed on garden leave (paid leave during notice)

During garden leave:

• Employment continues
• Pay and benefits must still be provided
• Employees may be restricted from starting new work

5. Right to protection from unfair treatment

Employers cannot:

• Reduce pay or benefits without contractual basis
• Single out employees unfairly during notice
• Discriminate based on protected characteristics
• Retaliate for raising grievances or claims

Employment law protections continue fully during notice.

6. Right to reasonable time off to look for work

Under the Employment Rights Act 1996:

• Employees with at least 2 years' service are entitled to reasonable paid time off to look for work or arrange training
• This applies where the employer has given notice of termination

The amount of time must be reasonable in the circumstances.

Payment in Lieu of Notice (PILON)

If an employer does not require the employee to work the notice period, they may make a PILON payment.

Key features:

• Employment ends immediately
• Employee receives payment equivalent to notice period
• Includes salary and often benefits depending on contract terms
• Must be properly calculated to avoid breach of contract

PILON terms are usually set out in the employment contract.

Employee Obligations During Notice Period

Employee rights are balanced with continuing obligations, including:

• Duty to work as normal (unless on garden leave)
• Duty of loyalty to employer
• Compliance with contractual policies
• Confidentiality obligations
• Restrictive covenants (where applicable)

Breaches during notice may lead to disciplinary action or loss of benefits.

Sickness During Notice Period

If an employee is off sick during notice:

• Statutory sick pay or contractual sick pay may apply
• Notice period usually continues running
• Payment depends on contract terms and sickness status

Employers must treat sickness absence lawfully and avoid discrimination, particularly where disability is involved.

Maternity, Paternity, and Family Leave Rights

Notice period rights are protected during family-related leave:

• Maternity leave continues unaffected by termination notice
• Statutory maternity pay may continue if eligible
• Employees retain redundancy protections during maternity leave
• Paternity and parental rights continue under statutory rules

Dismissal linked to family leave may result in automatic unfair dismissal or discrimination claims.

Bonus, Commission, and Variable Pay

Rights to variable pay during notice depend on contract wording:

• Bonuses may be payable if performance conditions are met
• Commission may be owed for work completed before termination
• Some schemes exclude payment if employment has ended (if contractually valid)

Disputes often arise where termination occurs close to bonus payment dates.

Holiday Pay During Notice

Employees may:

• Take accrued holiday during notice with employer approval
• Be required to take holiday if notice is sufficient
• Receive payment for unused holiday on termination

Holiday entitlement continues to accrue until the final day of employment.

Garden Leave Rights and Restrictions

During garden leave:

Employees retain rights to:

• Full pay
• Benefits
• Holiday accrual

However, they may be restricted from:

• Working for competitors
• Contacting clients
• Accessing workplace systems

Garden leave clauses must be expressly included in the contract.

Unfair Dismissal and Notice Period Issues

Notice period rights often overlap with unfair dismissal claims.

Common issues include:

• Immediate dismissal without proper notice
• Failure to pay notice correctly
• Withdrawal of benefits during notice
• Discriminatory treatment during notice period

These may result in tribunal claims for compensation.

Employment Tribunal Claims Related to Notice Periods

Employees may bring claims for:

• Unlawful deduction from wages
• Wrongful dismissal (breach of notice contract)
• Unfair dismissal
• Discrimination during notice period

Claims must generally be brought within 3 months less one day of the relevant act, subject to ACAS Early Conciliation rules.

Settlement Agreements During Notice Period

Employers and employees may resolve disputes during notice via settlement agreements.

These may include:

• Early termination of notice
• Compensation for notice pay
• Agreed references
• Waiver of legal claims

Once signed, these agreements are legally binding if statutory requirements are met.

Common Employer Errors

Frequent mistakes include:

• Incorrect calculation of notice pay
• Removing benefits during notice unlawfully
• Misapplying garden leave clauses
• Failing to include commission in notice pay
• Ignoring statutory rights to time off for job search

These errors often lead to claims for breach of contract or unfair dismissal.

Key Takeaways

Employee rights during a notice period in the UK ensure that employment continues under normal contractual and statutory protections until termination. Employees are entitled to pay, benefits, holiday accrual, and protection from unfair treatment, while also retaining rights such as time off to seek new employment. Employers must comply with notice obligations, pay requirements, and contractual terms. Disputes arising during notice periods commonly lead to claims for wrongful dismissal, unlawful deduction from wages, or unfair dismissal in employment tribunals.