People Management

What is a Notice Period?

20 February 2024

17 min read

Amanda Chua
Amanda Chua

Retaining your top talent is crucial, but there are times when employees need to move on. Whether they choose to leave or their departure is initiated by the employer, the notice period holds significant importance. 

During this time, various factors come into play, such as the impression your departing employee will leave behind. Negative feedback from former employees can severely impact your company’s reputation, with studies showing that 50% of potential candidates won’t apply to a company with a bad reputation. 

On the flip side, retaining these employees to avoid negative word-of-mouth isn’t advisable either. A Forbes study revealed that disengaged employees have a 15% lower profitability for a company, which equates to 34% of a disengaged employee’s salary. 

If we consider the average salary of $47,000, your company could be losing nearly $16,000 per disengaged employee per year. This shows the importance of considering letting disengaged employees leave, either voluntarily or through termination. In this article, we will guide you on handling their departure with the right ways and measures of implementing the notice period.

What is a Notice Period?

A notice period is a predetermined amount of time that an employee needs to serve before leaving an organization. It’s mandatory for the employee to serve this period whether the employer decides to file for termination or the employee resigns. The process ensures a smooth transition of responsibilities without any hassle as the employer gets enough time to find a replacement while the employee searches for another job and prepares for his departure. 

Types of Notice Periods

notice period

Some notice periods are clearly specified by the government, while others differ based on the employment contracts. Let’s have a close look at each one of them:

Statutory minimum notice periods

The local labor laws or government regulations set the statutory minimum notice periods. It states the number of days employees are supposed to work after resigning or being fired legally. It typically depends on the weeks, months, or years the employee has spent with the organization. The higher the number, the more the duration of the notice period.

Therefore, the length of the service and reason for termination are two factors that influence the length of statutory minimum notice periods. 

Contractual notice periods 

These notice periods are highlighted in the employment contract and agreed upon at the time of hiring. The duration is set based on the common understanding between the employer and the employee. It can be higher than the statutory minimum notice periods but cannot be lower in most cases. At the time of termination or resignation, the agreed-upon terms stay solid and must be complied with by both parties as they are legally binding. 

Probationary periods

A probationary period is the trial period at the beginning of employment. This period helps the employer and employee understand whether the job fits well. Many organizations typically have a probation period of three to six months. However, the time can vary depending on company policies and industry standards. 

During this period, the employee’s performance is evaluated against predefined standards, while the employee gauges their long-term alignment with the company.

At the end of the probation period, the employer might confirm the employee’s permanent position. Similarly, if the employee sees the organization fit, he accepts the offer. If not, he might negotiate or decide to leave the organization. However, the employer has the right to terminate the employment during probation with a 1-2 weeks notice. 

Termination with cause

When you are associated with an organization, there are certain things in the company policy you do not cross or violate. If you do, the employer can issue your termination without any further notice. Some common instances where this happens include theft, harassment, insubordination, repeated violations of company policies, or failure to meet deadlines and other job responsibilities. 

If the employee has received a fair share of warnings, the employer can issue a termination with cause. However, for it to pass through, the issue should be well-documented to withstand any legal battle. If there is no clear clause for termination, the employer must provide a notice period. 

Garden leave

Garden leave is when employees must serve their notice period away from the workplace. They are formally employed but do not contact clients, customers, or colleagues during this period. 

Employers typically put employees on garden leave when they are trying to protect the company’s interests and sensitive information or maintain stability during transitions. These leaves are generally issued to abide by the contractual laws and agreements. 

How Long is a Notice Period?

The length of a notice period varies based on different factors, such as employment contracts, company policies, and labor laws in the relevant jurisdiction. Depending on the employee’s position within a company, it can range anywhere from one day to a couple of months. 

Higher-level employees generally serve more extended notice periods as they need time to successfully transfer knowledge and responsibilities. In most cases, the duration of the notice period is clearly stated in the employment contract. If not, the employment act of the region stands firm, and both employer and employee shall fulfill the legal requirements of the notice period. 

For instance, in Singapore, if there’s no pre-agreed notice period, the duration depends on the length of service as stated by the Ministry of Manpower (MOM)

  • For less than 26 weeks of service: 1 day notice period 
  • For 26 weeks to less than two years: 1 week’s notice 
  • For two years to less than five years: 2 weeks’ notice 
  • For five years or more: 4 week’s notice 

Employers have the freedom to set more extended notice periods than the ones mentioned above. However, they cannot go for shorter notice periods than the mandated period set by the MOM. 

Factors in Determining a Notice Period

The duration of a notice period is dependent on a number of factors such as legal requirements, seniority, company policies, and more. Let’s take a look at all such factors: 

Legal requirements

In many jurisdictions, there are legal requirements specifying the minimum notice period that employers must provide during termination. These legal requirements vary based on labor laws and categories of employees.

Employment contracts

Employment contracts set the overall terms and conditions for the period of employment as well as post-termination or resignation. Many contracts clearly specify the duration of notice required by either party to terminate the employment relationship. This duration can vary based on the employee’s role, seniority, and length of service. It also clearly states the consequences of failure to provide notice, such as penalties, forfeiture of benefits, etc.

Any sort of negotiation regarding the notice period generally happens during the formation of the employment contract. Employers may offer longer notice periods as a benefit or incentive, while employees may demand a shorter one for flexibility. But the clarity on the process, obligations, and duration in the employment contracts ensure there are no disputes in the future. 

Employee role and seniority

Employee role and seniority play a crucial role in determining the notice period as the duration of the notice period increases with the levels in the organization. The higher the level, the more critical the job role is and the longer they are supposed to serve the notice period. Due to this, proper negotiation is crucial before coming to a mutually agreed decision. 

Employees with higher levels of seniority often have critical job roles that require longer periods for transition. They cannot simply leave as a lot of high-level decisions lie in their hands which require effective delegation of responsibilities. It is also a way of acknowledging their long-term commitments and contributions to the organization. Therefore, the impact of the job role on the organization is a major factor in the duration of the notice period. 

It’s worth mentioning that the current retirement age in Singapore is 63. Employers can choose to terminate employees who are approaching this age. However, according to the Retirement and Re-employment Act, employers must offer re-employment to eligible employees from age 63 up to 68. 

Industry standards

Employers often look to industry competitors and peers to determine the ideal duration of the notice period. It becomes easier to set the duration when benchmarking against similar organizations within the industry. For example, let’s say there is a standard of one to three months notice period for technical roles based on seniority and tenure. You can consider this and use it in your negotiations. Similarly, industries with lengthy training requirements may have longer notice periods to account for the time needed to train replacement employees. 

Company policies and practices

Company policies exist to ensure consistency and fairness in the treatment of employees. When determining notice periods, companies may set policies that apply uniformly across all employees to ensure equity in the termination process. Such policies are often set with specific business objectives in mind, such as minimizing disruptions and ensuring smooth transitions during employee turnover.

Let’s look at some things that could be stated in company policies regarding notice period:

  • All employees are required to provide a minimum notice period of 4 weeks before resigning from their position.” 
  • The company reserves the right to place employees on garden leave with immediate effect in case of breach of company policies or code of conduct.” 
  • Employees may request a waiver of the notice period under exceptional circumstances, such as acceptance of an offer for immediate employment elsewhere.” 
  • The company reserves the right to request a longer notice period from employees in certain circumstances.” 

Many more such clauses are put in the employment contract to give employees clarity on every situation that might fall through. With such clarity, you avoid unnecessary disputes at the time of resignation or termination. 

Employee performance

Many organizations go for performance-based notice periods where employees with consistently high performance levels are entitled to shorter notice periods. Based on their performance reviews, employers identify the ones with consistently good performance. Similarly, those with lower performance levels must work for more extended periods.

It’s crucial to recognize and appreciate employees who show great dedication and commitment to the organization. You can also give bonuses as incentives to employees with high-performance levels, as it leads to enhanced employee retention

Business needs

Your business needs play a crucial role in determining the notice period. More extended notice periods are required during periods of high workload as organizations require sufficient time for knowledge transfer and replacement recruitment. Project deadlines are another focus area, as you should set the notice periods such that current projects do not suffer from unnecessary delays. 

There are many external factors such as changes in market dynamics, trends, and technological advancements. Notice periods are set to keep up with all these changing requirements. 

Employee turnover rate

Industries with high turnover rates generally go with shorter notice periods as they require agility in fulfilling vacant positions. Shorter notice periods are also appealing to employees. Due to this, employers often offer these periods to attract and retain top talent. 

Cost remains another factor for shorter notice periods as high turnover rates incur significant costs associated with recruitment, training, and onboarding of new employees. Shorter notice periods help mitigate these costs by minimizing losses caused by prolonged vacancies. 

If your employee turnover rate is consistently increasing, it’s time you put managers into action to improve your employee work review, quarterly or annual. It’ll help you understand the areas of improvement better to ensure enhanced productivity and retention. 

Understanding the Relevance of Notice Periods in HR

Notice periods are highly relevant for both employers and employees for the following reasons: 

  • Smooth transition: the notice period ensures a smooth transition in both situations, whether the employee resigns or is terminated. It gives the required time to find a replacement, complete pending projects, and transfer responsibilities. 
  • Continuity of operations: notice periods give employers adequate time to fill vacant positions. This leads to minimal disruption of workflow and sudden gaps in productivity while ensuring enhanced employee engagement
  • Legal compliance: notice periods often have legal implications and are governed by employment laws and regulations. Adhering to these requirements helps employers stay compliant with labor laws. 
  • Employee protection: just like adhering to notice periods protects employers from the law, it protects employees from unemployment. It gives them enough time to search jobs, arrange finances, and negotiate terms of departure. 
  • Employer-employee relations: handling notice periods keeping in mind the needs of both parties helps build strong employer-employee relations. It preserves the company’s reputation and shows current employees how much the organization respects its people. Giving constructive feedback should also be prioritized to ensure no employee leaves with hard feelings. 

Proactive Measures in Implementing Notice Periods

notice period

While implementing notice periods, employers must focus on all areas that lead to a content departure of employees. Whether it’s providing incentives, helping in smooth transition, or effective communication, employees should leave the organization in a manner that ensures positive word-of-mouth. Here are some proactive measures you can take for the same: 

Clear communication

No one wants unnecessary disputes in the organization during notice periods. To ensure that both parties have clarity on how the process will follow, give clarity during the onboarding process. Communicate the details about the notice period, including the duration, conditions triggering its initiation, and any specific procedures to follow when giving notice. 

Moreover, give clarity on the repercussions of not complying to the necessary requirements. With such clarity, employees can make informed decisions about their departure timeline, while employers can redistribute work and find suitable replacements. It also gives employees the time to ask any questions regarding the notice period policies or procedures. 

Exit interviews

Exit interviews are crucial to gathering feedback from departing employees. It’s becoming increasingly important to understand why employees leave an organization, as research suggests that nearly 38% of employees quit within the first year of employment. 

With exit interviews, you give them a chance to share their experiences, insights, and reasons for leaving the organization. It’s an excellent way of identifying the areas of improvement in your organization. Mainly because people are more honest with exit interviews, and you get a clear picture of what’s not working. 

You can then use the information shared during these interviews to improve the employee retention rate and overall company culture. But to make that happen, you need to ask the right exit interview questions. Here are some ideas: 

  • Reason for leaving: What factors influenced your decision to leave the company? 
  • Job satisfaction: Did you feel adequately supported by your manager and colleagues? 
  • Work environment and culture: Were there any aspects of the company culture you feel could be improved? 
  • Growth opportunities: Were you provided adequate support and training to grow in your role? 
  • Leadership: How would you rate the effectiveness of your immediate supervisor or manager? 
  • Suggestions for improvement: What would it be if you could change one thing about the organization? 

While asking the right questions is essential, ensure you create an environment where employees feel comfortable sharing their feedback openly and honestly.

Learn more:

Effective transition planning

When an employee leaves an organization, a lot of responsibilities require reassignment. This is crucial to ensure essential tasks and projects continue without interruption during the notice period and beyond. Start by identifying responsibilities and the burden of work to assign interim or permanent replacements. As you transfer the responsibilities of one individual to the other, ensure you give proper training. 

Along with that, ensure the successful transfer of knowledge and expertise from departing employees to their team members or successors. This involves documenting procedures, sharing core insights, and providing training. When there’s a transition involved, you also need to communicate with stakeholders, clients, and external partners about the upcoming transition. Once you successfully conduct the whole process, do a post-transition review to identify and work on areas of improvement. 

Provide incentives

Employees tend to get relaxed when they are serving the notice period. This might become a hassle for managers who still need to finish work. That’s where incentives are essential for facilitating a smoother transition and motivating employees to fulfill their remaining obligations. 

Looking closely into the needs and preferences of the employees is crucial when designing incentive programs for the notice period. Let’s now get into the details of some common incentives you can offer: 

  • Bonus or additional compensation for employees who fulfil their notice period obligations satisfactorily. 
  • Retention bonus for employees who agree to stay for an extended notice period. 
  • Continued access to benefits such as healthcare coverage and gym memberships during the notice period.
  • Flexible work arrangements for departing employees, such as remote work options during the notice period for better balance.
  • Additional paid time off or vacations to facilitate a smoother transition and give them time to attend to personal matters.
  • Personalized thank-you gifts as a token of appreciation for their service.
  • Access to outplacement services such as resume writing assistance, job search support, and networking opportunities to help departing employees find jobs easily. 

While it might seem counterintuitive to provide so many incentives to someone leaving the organization, it shows current and future employees that your organization values its people. It increases their loyalty and enhances your organization’s reputation.

Leverage performance reviews

Performance reviews can help employers set notice period expectations and smooth the transition process. It also gives employees a chance to voice their issues in fulfilling the remaining obligations as both parties have clarity on what needs to be done. 

Such collaborations don’t leave room for potential obstacles during the notice period. Moreover, it also allows employees to connect individual performance goals with transition goals. When goals are linked together, performance and motivation to succeed eventually excel. 

Learn more:

Employee engagement

Make your employees feel valued and engaged, and witness the rise in productivity. The same goes during the notice period when you involve employees in discussions related to notice period policies and procedures. Seek their input on improving the transition process, addressing concerns, and ensuring a smooth handover of responsibilities. 

The employees who successfully fulfill the notice period obligations should also receive recognition and appreciation. Acknowledge their contributions during exit interviews, team meetings, or send personalized notes. Keep an open communication channel where employees come to you with any concerns they have while you ensure progress is on track. 

The Power of Streamlined Notice Period Management

Notice period is a critical phase that allows for a smooth transition when an employee leaves an organization. It provides time for both the employer and employee to prepare for the change and ensures a proper handover of responsibilities.

HRIS plays a key role in managing notice periods efficiently by automating processes, tracking timelines, and facilitating communication. Omni is your comprehensive solution that enables a seamless and efficient offboarding experience. 

Omni’s all-in-one HR management software allows you to seamlessly update employee records, communicate to relevant stakeholders and departments, and facilitate the entire end-to-end offboarding process in one, easy to use system, putting an end to silos and miscommunication.

Omni brings teams together, fostering collaboration and transparency by enabling smooth communication across departments, ensuring everyone is on the same page throughout the offboarding journey.

With Omni, you can say goodbye to manual paperwork and administrative tasks with streamlined workflows and automated reminders to carry out every step of the offboarding process; from initiating offboarding requests to managing tasks, documents, and access revocation, and even starting the recruitment process to backfill open positions.

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