how-to-run-a-small-business

Notice Period Guide: How to use notice periods

You have to make sure that business information is shared throughout the company before the employee leaves.

Deciding on the length of the resignation notice period in an employee’s contract is all about balancing two important things: business continuity and team disruption.

Business continuity

It’s crucial to take business continuity into consideration. If someone just leaves the company the day after being dismissed or handing in their resignation, then all the information, knowledge and know-how they have acquired over their time with the company will go along with them. You have to make sure that all the information that is useful to your company remains in the business.

Some of the departing employee’s experiences will only really be able to be shared through one on one meetings, whilst other pieces of know-how can just be typed up and shared on the company server. Depending on the amount of knowledge that an employee has accrued, the duration of an effective handover will vary.

The notice period will have to take into account the longest possible duration for that level of staff member because you cannot change their contract once they sign it!

Team disruption

On the flip-side, if you can be certain that an employee’s handover for a given role needn’t ever take more than say a month, then there is no point having a day longer written into the contract. This is because of the risk incurred by team disruption. This refers to the idea that having a departing and therefore demotivated employee on staff will have negative ripple effects across the company.

This is especially true if you are running a small business. Small companies mean small teams. One person being off the boil and inevitably acting distracted will have consequences and be reflected in the rest of your company’s productivity. Worse still, having already ‘checked-out’ mentally, the employee may even feel comfortable voicing unprofessional opinions and encouraging resentment in the rest of their team.

At CharlieHR, employees who are on their way out and have already completed their handovers aren’t usually made to work whatever outstanding time they have left. In effect, they’ll actually leave the office before their resigning notice period is up. This is because it usually creates more harm than good to have someone sticking around who doesn’t need or want to be there!

In terms of technicalities, there should always be two different notice periods in any contract.

Notice Period 1 - Probation

The first is for the probation period which should always be seen as an extended job interview. It’s very unlikely that such a new member of the team will have acquired any knowledge unique to them or be established enough to harm team morale if they were to move on quickly. For an employee on their probation period, you should have a notice period of only a week. As before, there’s obviously no need for them to come into the office for every day of that week once the notice has been given.

Notice Period 2 - Full-time team member

For other, full-time, contracted employees the notice period should typically be around a month long. In most situations, this should give you ample time to hire a replacement, complete the handover and adjust as a team.

But in some situations you should certainly look to increase the notice period of a departing employee:

1) Seniority

Employees with the most responsibility will typically have the most to hand-over and the biggest risk attached to a ‘changing of the guard’. On top of this, losing a team leader or C-suite figure can be jarring for the rest of the team, so the longer there is for people to get used to the idea of the change before it happens, the better.

2) Length of service

Just by virtue of experience, employees who have been working in your company for many years will have acquired knowledge and know-how beyond their role and level of responsibility and will therefore have more insights to share and handover to the rest of their team and/or replacements. There is also a legal requirement that employees who work for between 2 and 12 years are given as many weeks notice as years they have worked.

3)  Specialisation

Some roles are so vital for your organisation that having too short a notice period risks critical functions going unstaffed. For instance if you are working in the fintech space, losing your head of security without having enough to find a suitable replacement is an incredibly dangerous scenario.

Key things to think about when an employee hands in their notice:

  • Make the handover process as positive as possible to encourage the departing employee to do it in good spirits.
  • Think about hiring a replacement straight away and get the departing employee’s opinion on what they think you should look for.
  • Ensure all the knowledge that was previously just in their head is kept in the company.
  • Schedule and then conduct a thorough exit interview.
  • Collect all the logins that other employees might not have access to.
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