Employers will generally want to avoid a scenario where an employee resigns ‘on the spot’. Resignations with immediate effect can often cause operational challenges, not least due to staffing issues, which can also lead to financial loss.
The following guide for employers, line managers and HR personnel looks at the law around resigning with immediate effect, including the legal obligations on an employee when they want to resign, and how resigning without giving notice should be handled by the employer. We also look at ways in which immediate effect resignations can potentially be avoided.
What does the law say about immediate effect resignations?
By law, where required to do so under their contract of employment, all employees must work out their notice period if they resign. This is the amount of time an employee has to work for their employer on handing in their resignation, either as set out under any written employment contract, or implied by statute into that contract as a matter of law.
In the absence of a written contract, and where an employee has worked for their employer for less than a month, legally they do not have to give any notice. However, for an employee who has worked for their employer for one month or more, they must give at least one week’s notice on resignation. This will be the case even if they were not given a written statement of employment particulars from their employer when they first started.
The fact that nothing is in writing does not give the employee the legal right to resign ‘on the spot’. At least in theory, they should work the minimum statutory notice period of one week, as required. This will also be the case, even if the employee is still within any probationary period.
Where there is a written contract of employment, this should make provision for the period of notice to be given by both the employer on dismissal or redundancy, together with the notice that the employee is required to give on resignation. In some cases, this may reflect the statutory minimum period of notice as required by law. In others, the contract may require the employee to provide their employer with a lengthier period of notice, for example, from 2 weeks to as much as 6 months for some employees, typically where the employee is senior or otherwise essential to the running of the business.
The contract may also include a provision for pay in lieu of notice (PILON) and/or for garden leave, although a PILON or garden leave clause will almost always be at the discretion of the employer. For example, an employer may opt to use a PILON clause to prohibit a difficult employee from returning to the workplace on dismissal, or to prevent a disgruntled employee from being able to access client lists and other confidential data. The effect of this clause will be to end the employment relationship with immediate effect, without the employer being in breach of its own legal obligation to provide a minimum notice period on dismissal or redundancy. Equally, the employer could use a garden clause to not only keep an employee away from the business, but to prevent them from working for a competitor, where the employee will still be employed until their garden leave ends.
However, these types of contractual provisions are protective measures for the employer’s benefit, where contracts will not typically contain comparable provisions to allow an employee to resign with immediate effect or to work out their notice from home on full pay.
Employee obligations when resigning
There are many reasons why an employee may not want to work their notice period, instead wanting to resign with immediate effect. This could be where, for example, they have the offer of another job, perhaps on better pay and conditions but with an immediate or short start date, or where they are dissatisfied with their job or working conditions.
The employee may also feel uncomfortable working out their notice having made a decision to leave the employer’s business. In some cases, the reason for their resignation could be due to their working environment generally, either because they feel they have been treated badly at work and/or as a result of work-related stress, where this has reached unmanageable levels and they feel forced to resign without working their notice.
Regardless of the reason, if an employee has made a decision to resign, in this way bringing their employment contract to an end, they will still technically be required to work out any notice period. This will be either the statutory one week minimum or, where there is express provision within the contract of employment, the employee will be contractually bound by that term, assuming they want to get paid for that period.
In theory, by resigning with immediate effect, they not only forego any pay for the unworked notice period, but will expose themselves to a potential claim by the employer for breach of contract. This is where the employer can show that financial losses have arisen as result of the employee’s immediate effect resignation. This could be where, for example, the employer is left short-staffed, resulting in loss of customers or client contracts. It could also be where the employer has had to pay for the cost of urgent temporary cover.
How to handle resignations with immediate effect
If an employee resigns without notice, there are in effect two options for you as an employer; you can either choose to accept their resignation with immediate effect, or you could look to enforce any relevant applicable notice period.
Depending on the circumstances, it may be in the organisation’s interests for the individual to leave without working their notice, for example, if there have been issues such as poor performance or workplace conflict.
If you do not want to accept the resignation without notice, you will need to clarify the individual’s legal obligations in relation to giving notice. In most cases, where an employee has resigned with immediate effect, they will be contractually bound to work at least one week’s notice. As such, they will arguably be in breach of contract, where the employer may be justified in threatening the employee with legal proceedings unless they work their notice. However, there are several difficulties with this approach, not least by putting an employee under pressure to work out their notice period when they are reluctant to do so is highly unlikely to achieve the desired result.
An employee who feels forced to work their notice will almost certainly not be engaged in their work during this period, making the whole exercise futile. There is also the possibility that the employee may retaliate, deliberately causing problems for the employer because they feel forced to be there. The employer should also bear in mind that bringing a breach of contract claim can be costly and time-consuming, not to mention tricky to prove, where the employer would need clear evidence of a causal link between the employee’s refusal to work their notice and any financial losses sustained. In most cases, therefore, a threat to sue the employee would be an empty threat, that the employee may choose to ignore.
Additionally, when deciding how to handle an immediate effect resignation, it is important for an employer to bear in mind that an employee who refuses to work their notice may have a very good reason for this. This could be where, for example, they have been treated badly at work and/or are suffering from work-related stress where, in either scenario, they feel forced to resign and justifiably unprepared to work out their notice because of this.
If the employee has been bullied or harassed at work, and the employer has failed to take all reasonable steps to prevent this conduct, or where an individual is suffering from employee burnout due to heavy workloads or long hours, and the employer has not taken steps to ensure their health and wellbeing, the employer may themselves be exposed to a potential claim against them. An employer is legally responsible for the acts of other employees in the workplace, a concept known as vicarious liability, where the employee may have a claim for constructive dismissal and/or unlawful discrimination if they have been harassed or bullied at work and the employer has done nothing to stop this.
Equally, the employer is under a statutory duty to ensure the health, safety and welfare of employees at work, where failing to identify an individual susceptible to employee burnout could also lead to a potential claim for constructive dismissal and/or personal injury. In these types of resignation scenarios, the employer must tread extremely carefully and should be trying to support the employee who is looking to leave with immediate effect.
The employer, where at all possible, should always endeavour to identify the reason for an employee resigning with immediate effect. As previously explained, there may be a number of reasons why an employee chooses to resign on the spot, from having found a more lucrative job with an immediate or short start date, to feeling forced to resign because of unmanageable stress levels at work. By trying to establish the reason for the employee’s decision, the employer may be able to persuade the employee to work out their notice or even avert their resignation altogether, where really what the employee needs is time off.
The employer may also consider negotiating an acceptable compromise with the employee, one that works well for both of them. By agreeing to an alternative arrangement, such as halving the notice period or allowing the employee to take any unused annual leave instead of working their full notice, this can help to minimise any potential problems that them leaving without notice may cause. For example, this will give the employer time to secure a suitable replacement and, if needed, enable the employee to hand over to their replacement, providing a smooth transition from them leaving to someone new starting.
For senior and other key employees, an agreement to work some of their notice period can be far more preferable for the employer than them working no notice at all. If this is agreed with the employee, rather than forced upon them by way of threats, the employee is also more likely to be engaged in their work up until their last day. Equally, for the employee, by working a shorter notice period, they will avoid the risk of being sued, and ensure that they still walk away from the business sooner than they perhaps expected. In this way, they are less likely to miss out on any alternative job offer if that is the reason for them leaving.
Deterring resignations with immediate effect
If an employee resigns with immediate effect, this can cause serious issues for an employer when it comes to efficiently running their business. In some instances, not least where the employee is especially senior or essential to the running of the business, financial losses may result in consequence if the employee refuses to work their notice. Even where the employee is more junior, their immediate resignation can easily result in costs to the employer’s business if understaffed, including but not limited to the cost of an agency worker by way of a temporary replacement. This can also be bad for overall morale.
It is therefore important for employers to try to minimise the possibility of their employees resigning with immediate effect. In addition to any remedial steps that the employer might take, such as trying to persuade an employee threatening immediate resignation to change their mind or at least work out some of their notice, there are also various preventative steps in which immediate effect resignations can potentially be avoided. These include:
- Providing a clearly drafted employment contract: by ensuring that any notice provisions are set out in writing in an easily accessible and easy-to-understand way, this can help to ensure that an employee will be aware of their contractual obligations from the outset, and willing to honour these obligations. It is also important to ensure that any employee notice period is not too onerous, where the length of notice must be proportionate to the nature of their role within the business. For senior or skilled employees, a notice period of 3 to 6 months is not necessarily unreasonable, while for more junior members of staff that can be more easily replaced, this should be a period of no more than 1 to 2 months.
- Highlighting the employee notice period during the onboarding process: when an employee first starts work for an employer, in addition to providing a clearly drafted employment contract, it can be a useful exercise to highlight the provisions around working notice on resignation. By ensuring that employees have read their contract and fully understand their contractual obligation to work their notice if they decide to leave, this can help to prevent employees resigning with immediate effect. It should also be made clear to the employee that they will not be paid for any unworked notice period.
- Ensuring the welfare of employees at all times: by having measures in place to regularly check on an employee’s welfare, in this way helping to identify at an early stage any issue with things like bullying or work-related stress, this can help to minimise scenarios in which employees feel forced to resign without working out their notice. Measures to help ensure employee-wellbeing could include regular performance feedback, frequent welfare check-ins, back-to-work interviews following any period of sick leave and implementing effective grievance procedures to deal with workplace complaints and issues.
DavidsonMorris’ experienced employment law advisers help employers with all aspects of employee exits and workplace disputes, including resignations.
If you have a question about resignations or dealing with contentious exits, contact us.
Immediate effect resignation FAQs
What does immediate effect resignation mean?
Resigning with immediate effect is when an employee wants to terminate their employment without notice.
Can an employee refuse to work their notice period?
Employees who have been employed for more than one month are required by law to give at least one week's notice to resign. Their employment contract would also usually specify the required notice period. Failure to give or work the applicable notice period can constitute a breach of contract.
Can you be disciplined after resigning with immediate effect?
If an employee fails to give the required notice or to work for the required notice period, their employer may be able to take legal action against them for breach of contract.
Last updated: 10 July 2023