Notice and exit terms

In short. For a senior role, your contract usually sets a notice period longer than the statutory minimum. Check whether the employer may put you on garden leave or pay you in lieu, what each payment covers beyond base salary, and how the leaving date falls against your bonus and vesting dates. The leaving date and the stated reason often matter more than the notice itself.

How much notice

The Employment and Industrial Relations Act sets a minimum that rises with continuous service, from one week up to twelve weeks. For technical, administrative, executive and managerial posts, a longer period may be agreed, and senior contracts usually agree one. The longer of the two applies. The full scale is in notice period.

Once probation is over, an employer may end an indefinite contract only on grounds of redundancy or for a good and sufficient cause. Notice does not make a dismissal fair. On a fixed-term contract ended early without good cause, the law entitles you to half the wages for the rest of the term, and the contract may provide more: see Schembri v National Orchestra.

In practice. For the payments the Act itself sets, "wages" leaves out bonuses, allowances, commissions and benefits in kind. For a senior package, the statutory figure is therefore a floor, and the contract or the negotiation decides the rest.

Working notice, garden leave or pay in lieu

• Working your notice. You carry on in the role until the leaving date.
• Garden leave. You stay employed and paid, but stop working and stay away from clients and colleagues. Whether it can be imposed depends mainly on your contract. You still owe fidelity and confidentiality, so you cannot start with a competitor before the notice ends.
• Pay in lieu of notice. Your employment ends at once and you are paid for the notice instead. It frees you to start a new role, unless a post-employment restriction stops you.

If the employer gives notice, the law also lets you stop working during it and claim half the wages for the rest of the notice. That rarely suits a senior person, but it shows the balance the law strikes.

In practice. The choice decides what you can do next. If you have a role to go to, a short exit with pay in lieu is often worth more to you than its face value. If you do not, garden leave keeps your salary and benefits running. Either way, settle how it fits with any non-compete, so that you are not kept at home and then kept out of the market.

What the payment should cover

• Benefits: health insurance, car, allowances and pension contributions stop when employment ends. Ask for their value, or for cover to continue.
• Bonus: would you have been employed on the bonus date if notice had been worked? If so, the payment should reflect it.
• Share awards: an immediate leaving date can fall before a vesting date that notice would have reached. See bonus, shares and options.
• Leave: untaken leave is paid separately, on top.

In practice. First offers tend to present amounts already owed, such as notice and untaken leave, as if they were concessions. Separating what you are owed from what is offered on top shows how much is really being paid for your agreement.

The leaving date and the reason

The date your employment ends sets the bonus and vesting position, the start of any restriction and the time limit for a claim. The stated reason, whether redundancy, resignation, mutual agreement or nothing at all, can decide your leaver status under incentive plans, what your reference says and what a regulator is told.

An unfair dismissal claim must reach the Industrial Tribunal within four months, and negotiations do not stop the clock. At your request, the employer must give you a certificate of service; a reference and an announcement are a matter for agreement.

In practice. The stated reason is often the clause given least attention and the one with the widest effects. A change of a few words can move you from bad leaver to good leaver. If you hold an MGA or MFSA approved role, see regulated roles.

Where it goes wrong

• resigning, or agreeing to "resign", when the role has in fact been removed;
• a pay in lieu figure that covers base salary only;
• a leaving date that falls just before a bonus or vesting date;
• garden leave followed by a full non-compete, with nothing set off;
• talks that run past the four-month time limit for a claim.