What Is a Notice Period? [And Is it Required?]

Career Success

Jun 13

Most people in the US don’t know what a notice period is. That’s because every state except Montana has adopted the at-will employment doctrine. In lieu of statutory notice periods, most of us have bought into a non-binding cultural norm that employees resigning give a two-week notice and employers terminating someone typically give zero notice.

But, that’s not always the case. There are some instances where employees are owed a notice period by federal and state law, although not exactly defined as a notice period as Europe may define it.

Today we’re going to cover the different types of notice periods, what the rules are in the US, and the benefits of adopting contractual notice periods for both employers and employees.

What is a Notice Period?

A notice period is a period of time that occurs between a letter of dismissal or letter of resignation and your last working day. In other words, before you are terminated or before you resign, you and the employer give each other a notice.

Many European countries have them written into law. The UK, Poland, Denmark, and Germany are just a few that require both employer and employee to give a notice before separating.

For example, in the UK if you intend to resign or your employer intends to dismiss you, each party must notify the other in advance. The notice period depends on the duration of employment.

In the US, some employment contracts (that thing you sign when you start a new job) define terms for a notice period. For one VP role, I had a 60-day notice period. I had to give the employer a 60-day notice before leaving and they had to provide me with a 60-day notice before ending my employment.

Types of Notice Periods

There are different types of notice periods around the world. Here are the most common ones.

Statutory Notice Periods

This is when a law sets the legal minimum notice period that an employer or employee must give before resignations and terminations. It’s usually defined by the amount of time that an employee has been working for a company and is most common in Europe.

For example, in Germany, there is a statutory notice period of 4 weeks and it takes effect on the 15th day or the end of the calendar month. The notice period increases depending on the length of an employee’s employment and can go all the way up to a 4 months notice for employees who have been employed with the same company for 10 years or more.

Wouldn’t that be nice to have a 4-month notice before you were terminated or laid off? If you’re in HR and you’re creating international employment agreements, you need to be aware of these different statutory requirements.

Contractual Notice Periods

This is a notice period specified in an employee’s work contract when they accept a job. If there is a statutory minimum, the contract cannot be less than that period. In the US, I find these exist more commonly with very specialized and senior-level roles.

Probationary Notice Periods

This is a trial period for new employees and it varies based on local employment laws. While not required in the US, many organizations still set probationary periods for new hires which typically range between 1 and 6 months.

During the probationary period, the employer or employee may determine that employment should end and can mutually agree to terminate the employment contract with a shorter notice (or no notice).

Make note that the US has an at-will employment doctrine which means that even outside of the probationary period, both parties can separate with or without notice.

Pay in Lieu of Notice

This happens when an employer offers to pay an employee on the day of their resignation or dismissal instead of providing a notice period. It includes the same compensation and benefits that the employee would have earned during the notice periods.

So if the notice period were 4 weeks, the employer would pay the employee for 4 weeks of pay plus benefits.

Gross Misconduct

If there are any unethical or unprofessional behaviors conducted by the employee while engaged at work, an employer can usually dismiss them immediately without notice or pay in lieu. Check with your employment lawyer before doing so.

Notice Periods In the US

TL;DR: Yes, there are both statutory and contractual notice periods in the US.

Ok, this is all fine and dandy, but what about all of us in the USA? We have this non-binding cultural norm of a two week’s notice when resigning and no notice when being terminated. Talk about a double standard.

Well, the US practices at-will employment (every state except Montana) and does not require notice periods by federal law unless they are stated in an employment contract.

However, that doesn’t mean there are no situations where the law does require an employer to give you notice.

The federal WARN Act requires employers with over 100 full-time employees who layoff 33% of their workforce or 500 individuals at a single site to give those employees a notice period.

Some states have also adopted stricter versions of the WARN act such as California. California law requires employers to give employees a 60-day notice prior to a mass layoff if they have 50 or more employees. There are some additional nuances to the law, but it does prescribe statutory notice periods for those who are employed with the company for 6 months before the layoff.

If an employer doesn’t give a notice period they can face daily fines and back pay for salary and benefits to workers who were affected by the layoff.

There are ways to protect yourself as an employer such as having employees sign severance agreements and other things, but everyone should be aware of this very important requirement.

If you were laid off without notice and your employer is governed by WARN acts, be aware that if you are terminated due to misconduct this may void any statutory or contractual notice periods you have.

Why are Notice Periods Important

Including noticed periods in employment contracts can be beneficial even if there is no statutory requirement. If you are an employer, here are some reasons you may think about including a notice period in your employment contracts.

It provides a straightforward process and transition plan during a resignation or termination to ensure knowledge is transferred and projects are completed.
It makes managing relationships and expectations easier. There is no gray area.
It gives the employer time to find a replacement during resignations, avoiding burnout from others who have to absorb duties, a disruption in business activities, or a negative impact on company culture.
It gives the employee time to find job search services and prepare for what’s next after their termination.
It increases the likelihood that the employer and employee part on good terms and maintain positive reputations.

How to Implement an Effective Notice Period Process

If you are implementing a notice period, here is some advice.

Consult legal, yes even if you are in HR. Consult a practicing employment attorney in the jurisdiction that the employee resides in.
Include notice periods in your employment contract and make sure it’s clear and communicates both employer and employee obligations.
Offer incentives such as severance pay or retention bonuses to encourage employees to provide their notice of departure if it’s not legally required.
Document any unsatisfactory performance or negative behavior in performance reviews and address problems early.
Ensure the entire HR team and managers have training on communication and how to identify and work with dissatisfied employees (especially during big changes or layoffs).
And as Sherri Carpineto always says on LinkedIn, be a good human.

How to Determine How Long Your Notice Period Should Be

If you’re trying to decide how long a contractual notice period should be, here are some questions you may wish to ask your leadership team.

How long will it take to replace the team member? Remember, senior roles take longer.
Are there any projects the departing employee is involved in? How long will it take to finish them? Are they needed to finish them?
How much would performance and productivity hurt if they weren’t here? How essential are they to the company strategy and execution?
How much time will be needed to train the new person and transfer information? Can this be done without the departing person?

Noticer Period Recommended Reading

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Cole Sperry has been a recruiter and resume writer since 2015, working with tens of thousands of job seekers, and hundreds of employers. Today Cole runs a boutique advisory firm consulting with dozens of recruiting firms and is the Managing Editor at OptimCareers.com.