Deducting pay for short notice

It seems that I am finding an increasing number of situations where an employee gives short notice when they resign.  And increasingly companies have a clause in their contracts that means an amount equal to the value of the short notice can be deducted from final pay.  Unfortunately the Courts do not agree.  A recent case has been referred to the Employment Court and they have been quite definite about this not being enforceable unless the amount to be deducted is a "genuine pre-estimate of damages". There has to be an expected actual financial loss to the company as a result of the notice being short.

Stress on the manager isn't a cost; recruitment costs will be incurred anyway; and the cost of paying temp staff may be higher than the full cost of an employee salary - but it would be minimal.

And even if you take them to court for breach of contract (which it is) the court would not award any fine to you unless you can show you have incurred cost!

The one thing that can be withheld is any discretionary payment.

Give me a call if you wish to discuss any issue like this - it is a question of how to calculate reasonably expected costs and tie your employment agreements to this.

Need help managing staff?

Mike has a wealth of experience advising on every aspect of the employer-employee relationship. I can give you per-phone guidance or work along side you to make things happen.

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