Terminations and Offboarding in the United Kingdom Internal

What is the notice period in the United Kingdom?

Either party can terminate an employment contract by providing statutory notice.

Any employee who has completed at least 1 month of service is entitled to statutory minimum notice periods.

Statutory minimum notice periods that an employer must recognize to an employee are:

• At least 1 week’s notice during the probationary period and for service of less than 2 years;
• At least 1 week’s notice for each year of continuous service if more than 2 years but less than 12 years;
• At least 12 weeks’ notice if the length of service is 12 or more years.

Standard practice in the U.K. is reciprocal 1 week of notice during 3 or 6 months of probation period (if applicable), and thereafter 1 month of notice; or 1 month of notice during 3 or 6 months of probation period (if applicable), and thereafter 3 months of notice.

Is unused leave paid out at the time of termination?

Yes. Unused annual leave is a statutory right for employees in the U.K.

During their notice period, employees may be able to take unused leave. If this is not possible, employers must pay for any untaken statutory leave, even if employees are dismissed.

What is the severance payment in the United Kingdom?

Employees in the U.K. have no statutory right to receive any severance pay on top of the contractual payments stipulated in the employment contract and paid until the actual leaving day.  

Only when employees above 2 years of service with the same employer are made redundant, the following  statutory redundancy pay where an employee is made redundant would apply:

• half a week’s pay for each full year the employee was under 22 years old;
• one week’s pay for each full year the employee was over 22 but under 41 years old;
• one and half weeks’ pay for each full year the employee was over 41 years old.

Length of service is capped at 20 years.

Employees are not entitled to statutory redundancy pay if the employer has offered to keep the employee on, or suitable alternative work which the employee refuses without good reasons. 

To calculate redundancy pay: Employee’s weekly pay is the average they earned per week over the 12 weeks before the day they receive the redundancy notice. A week’s pay is capped at a statutory limit. From April 6, 2023, the limit on a statutory week’s pay will increase to £643 (up from £571). 

Caps apply to the redundancy payments and caps change periodically. Please refer here to calculate redundancy pay, ensuring that the most up-to-date caps are taken into account.