Navigating Notice Periods: A Guide for HR and Business Leaders

Saying goodbye to valued employees requires proper handling and acknowledgement of their hard work and contributions.

As an employer, giving your departing employee a notice period is not only a professional practice but also allows for a smoother transition. Notice periods might seem simple, but they often throw unexpected challenges your way, such as managing conflicts and confidentiality.

This guide will walk you through the complexities of notice periods, offering HR best practices to ensure positive transition.

A notice period is a contractual requirement that enables a smoother shift when an employee leaves. It provides both parties with the necessary time to prepare for the change, tie up loose ends, and ensure a seamless handover of responsibilities.

While the duration can vary, notice periods typically range from four weeks to several months, depending on the role, industry, and company policies. The Philippine Labor Code sets a standard period for resignations, but terms may vary by contract and company policies. Here’s a look at the different types:

This is the minimum amount of notice required by law for an employee to terminate the contract. Under the Philippine Labor Code, the minimum notice period is 30 days, ensuring employers have time to fill the vacancy or adjust accordingly.

A contractual notice period, specified in an employee’s work contract, is the required time to notify the other party before ending employment. It varies by contract type and what the company deems necessary for a smooth shift. For instance, if the contract specifies a two week notice period, the employee must provide at least two weeks’ notice before terminating the contract.

For technical, hard-to-find, and senior management roles, the employment contract may specify an extended notice period, such as 40 or 60 days. This ensures a thorough knowledge transfer, smooth transition, and enough time to find a suitable replacement, following the principle of contract autonomy — the parties’ freedom to define their obligations and all aspects of contract performance.

A probationary notice period is the time within which an employee or employer must inform the other party of the intention to resign or terminate employment during the probationary period. The length of this notice period varies based on the employment contract and company policies. Immediate resignation may be permitted under certain conditions or mutual agreement.

A redundancy notice is a formal written communication from an employer to an employee, informing them of their employment termination due to redundancy. This situation arises when an employee’s position is no longer needed for the business. 

As mandated by the Labor Code of the Philippines, a redundancy notice must be given at least one month before the termination date, ensuring both the affected employees and the Department of Labor and Employment (DOLE) are properly informed and the process meets legal standards.

Aside from the different types of notice periods, here are different ways an employment contract can end:

• Dismissal without Notice (Gross Misconduct): In cases of serious employee misconduct, the employer can dismiss the employee immediately without pay during the notice period.
• Payment in Lieu of Notice (PILON): An employer can opt to pay the employee for their notice period instead of having them work it. This is called payment in lieu of notice.
• Fixed-Term Contracts: This contract has a specific end date written in the agreement. When that date arrives, employment simply ends — no notice period is needed. However, if the employer needs to let the employee go before that date, they will give the standard legal notice period.

Understanding these legal and contractual obligations is crucial to avoid financial penalties, lawsuits, operational hurdles from sudden staffing gaps, and a damaged reputation that makes recruiting harder.

As an employer, your role in managing notice periods is equally important. Handling resignations with grace and empathy can leave a lasting impression on departing employees and reinforce your company’s reputation as an ideal workplace.

Here’s what you need to do when your employees decide to part ways with your business:

When your employee submits their resignation, the first step is to acknowledge it respectfully. Thank them for their contributions to the company and express gratitude for the notice provided. Avoid any immediate negative reactions, as this can create an uncomfortable situation.

Refer to your employee’s contract or your company’s policy to understand the specific terms and requirements surrounding the notice period. This will inform you of the expected duration, responsibilities, and potential penalties for non-compliance.

Once you’ve reviewed the notice period terms, clearly communicate your expectations to your departing employee. Outline their responsibilities during this period, such as completing outstanding projects, participating in knowledge transfer activities, and maintaining professionalism and productivity.

Initiate a transition plan to ensure a smooth handover of your employee’s duties and responsibilities. Identify critical tasks, projects, and client relationships that need to be reassigned or transitioned. Involve your departing employee in this process to leverage their knowledge and expertise.

Schedule an exit interview with your departing employee. This is an excellent opportunity to gather valuable feedback on their experiences, identify areas for improvement within the organization, and understand their reasons for leaving. Remember to approach this conversation with an open and non-judgmental mindset.

Communicate your employee’s resignation and upcoming departure to the rest of the team in a respectful and professional manner. Address any concerns or questions from colleagues and ensure a positive work environment during the transition period.

As the notice period comes to an end, ensure that all outstanding tasks and responsibilities have been handed over properly. Collect any company property, such as laptops, access cards, or proprietary materials, from the departing employee.

Make sure all necessary paperwork is completed, such as final pay calculations and benefits termination. Also, provide them with the necessary documentation, such as employment verification letters or references, if requested.

On your employee’s last day, take the time to express your gratitude for their contributions and wish them well in their future endeavors. Remember, a positive exit experience can foster goodwill and potentially lead to future rehires or even client referrals.

By understanding and navigating notice periods effectively, you can turn a potentially challenging situation into an opportunity for growth and positive change.

At Sprout, we specialize in providing comprehensive HR and Payroll solutions designed to streamline your workforce management.

Our platform ensures full compliance with labor laws, automates the tracking of notice periods, and generates accurate final pay computations, reducing administrative burdens and minimizing errors.

Book a consultation to learn more about how we can help streamline your HR processes and cultivate a thriving workplace.