Theresa May has resigned as Prime Minister and the leader of the Conservative Party with effect from the 7th June 2019. Following such a high-profile resignation, we are presented with the opportunity to consider what employers should do in the event an employee decides to move on to pastures new.
Notice Period & Pay
You should check the employee’s contract of employment to determine what period of notice the employee is required to give. It may differ from the notice period you are required to give as the employer. In the event the employee does not have a contract of employment, they must provide you with the statutory minimum notice of 1 week where they have been employed for 1 month or more.
Where you do not require an employee to work their notice, you can make a payment in lieu of notice (‘PILON’) where the contract of employment permits you to do so. Where you make a PILON without a contractual right, you will commit a breach of contract and the employee would be entitled to recover damages for the losses they suffer (e.g. benefits and holidays accrued during their notice period) and you will be prevented from enforcing any terms that are designed to survive the termination of their employment (e.g. post termination restrictive covenants).
If an employee resigns without providing the required notice, you are entitled to seek to recover any losses you incur as a result of them breaching their contract, for example, agency worker placements fees or overtime costs for existing workers to cover the departing employee’s work etc. You cannot deduct the salary for their notice period as this is not a loss you have incurred (as you have not paid it!).
Post Termination Restrictive Covenants & Confidentiality
Depending on the seniority or role of the employee, they may have restrictions within their contract of employment which govern what they can and can’t do when their employment comes to an end (e.g. limits on working for a competitor, poaching clients/customers etc). It is good practice when acknowledging the employee’s resignation to remind them of their post termination obligations, including any confidentiality obligations. You should be alert to more than one member in the same team giving notice around the same time, in case there is a planned team move to a competitor.
Holiday Pay & P45
Employees continue to accrue holiday up to their termination date and therefore are entitled to be paid for all accrued but untaken holidays in their final pay. A deduction can be made from their final salary if they have taken more holiday than they have accrued. P45s should be issued following their last day of employment.
It is always advisable to confirm receipt and acceptance of an employee’s resignation and their last day of employment. It is a good opportunity to set out the arrangements upon termination, including the return all company property, the need to utilise any accrued holiday during their notice period and the requirement for a handover of duties.
For specialist advice on contracts of employment, employee resignations or on any other employment law matter, please contact our Coventry based Employment Law Solicitors:
Email: Lianne@askewslegal.co / Jake@askewslegal.co
Askews Legal LLP, 5 The Quadrant, Coventry, CV1 2EL Tel: 024 7623 1000 www.askewslegal.co