notice pay
📖 What is notice pay? Meaning and definition
Notice pay is a sum of money an employer may be ordered to pay to a former employee if the employer failed to pay them for their statutory or contractual notice period upon termination of employment. This payment is typically awarded as damages for a 'breach of contract' claim, which can be brought before an Employment Tribunal. The amount awarded can be calculated based on the employee's gross pay, especially if it is considered 'Post Employment Notice Pay' for tax purposes, or as a net sum after deductions and any earnings the employee made in mitigation.
When an employee is dismissed, they are usually entitled to a period of notice, either as specified in their employment contract or as a statutory minimum. If the employer does not provide this notice or pay the employee in lieu of it, the employee can claim the unpaid wages for that notice period. The Employment Tribunal can determine the length of the statutory notice period, for example, one or two weeks, as seen in some cases.
The calculation of notice pay takes into account the employee's earnings and any 'earnings in mitigation'. This means that if the employee found new work and earned money during what would have been their notice period, those earnings might be deducted from the total notice pay due. The Tribunal will order the employer to pay the determined sum within a specific timeframe, often 14 days, once the claim for breach of contract regarding notice pay is found to be 'well-founded'.
📋 Requirements
- The employee was not paid for their statutory or contractual notice period.
- There was a breach of contract by the employer in relation to notice pay.
- The claim for notice pay is brought before an Employment Tribunal.
- The Employment Tribunal determines the claim to be 'well-founded'.
📝 Procedure
- The claimant (employee) provides information to the Employment Tribunal regarding their claim.
- The Employment Tribunal makes a determination on the claim for breach of contract for notice pay.
- The Tribunal calculates the amount of notice pay due, considering gross pay, net pay, and any earnings in mitigation.
- The Respondent (employer) is ordered to pay the determined sum to the Claimant within a specified number of days (e.g., 14 days).
💡 Examples
- An employee whose statutory notice period was one week was not paid for that period after their dismissal, leading to an Employment Tribunal ordering their former employer to pay them the net sum of £664.97.
- A claimant successfully brought a complaint of breach of contract for notice pay, and the Employment Tribunal ordered their former employer to pay £11,292.31 as damages, calculated using gross pay.
- An employee was owed £1285.06 in net notice pay but had earnings of £840 net in mitigation, resulting in the employer being ordered to pay the difference of £445.06.
- After being dismissed, an employee with a two-week statutory notice period was not paid for this time, and the Employment Tribunal found their claim for notice pay to be well-founded.
📚 Legal basis
- Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994
- Employment Tribunal Rules 2024
❓ Frequently asked questions
What does 'breach of contract in relation to notice pay' mean?
This means your employer failed to uphold their contractual or statutory obligation to pay you for your notice period when your employment ended. The Employment Tribunal can find such a claim 'well-founded' and order payment.
How is the amount of notice pay calculated?
The amount can be calculated based on your gross pay, especially if it's considered 'Post Employment Notice Pay' for tax. The Tribunal will also consider any 'earnings in mitigation' you had during your notice period, deducting them from the total owed to arrive at a net sum.
What if I found another job during my notice period?
If you had 'earnings in mitigation' from another job during what would have been your notice period, these earnings may be deducted from the total notice pay your former employer is ordered to pay you.
How long is a statutory notice period?
The statutory notice period can vary, but the Employment Tribunal has referred to periods such as one week or two weeks in different cases, depending on the length of service.
Do I need a solicitor to claim notice pay?
While you can represent yourself, as seen in the cases, navigating an Employment Tribunal claim for breach of contract can be complex. You might find it helpful to consult a qualified solicitor to understand your rights and the process.
What is 'Post Employment Notice Pay'?
This refers to notice pay that is subject to specific tax rules, often calculated using gross pay, reflecting the likelihood that the claimant will have to pay tax on it.