The notice period is the contractually defined time between an employee's resignation or a firm's decision to terminate employment and the final day of the employment relationship. During the notice period, the employment contract remains in force: the employee is typically expected to continue working, and the employer continues to pay salary and provide contractual benefits — unless the firm elects to place the employee on garden leave or pay in lieu of notice instead.

Notice periods in consulting vary significantly by career level and by jurisdiction. At junior levels, one to three months is typical in most markets. At Manager and above, three to six months is common. Senior Manager, Principal and Partner contracts in many markets stipulate six to twelve months — and in some cases longer — reflecting both the practical difficulty of replacing senior talent quickly and the firm's interest in controlling the timing and terms of senior departures.

Notice Period and Talent Acquisition

Long notice periods at senior levels have direct implications for talent acquisition timelines. A Senior Manager or Principal recruited from another firm cannot typically start for three to six months after accepting an offer — sometimes longer. This delay must be factored into hiring plans, particularly for roles where the vacancy is creating immediate capacity pressure.

Some firms offer signing bonuses structured to compensate a candidate for income lost while serving a notice period — for example, where the candidate's current employer has a bonus payment due during the notice period that will be forfeited if they resign. Understanding the notice period obligations and associated compensation structures of the candidates being recruited is therefore part of effective offer management.

Payment in Lieu of Notice (PILON)

Rather than requiring an employee to work their full notice period, a firm may elect to make a payment in lieu of notice (PILON) — paying the salary and contractual benefits equivalent to the notice period as a lump sum, in exchange for the employment relationship ending immediately. PILON is used when the firm wants a clean and immediate separation: the employee leaves the building on the day of the termination conversation rather than working through a notice period that may be disruptive.

The tax treatment of PILON varies by jurisdiction and by whether the right to make a PILON payment is included in the employment contract. In some markets, contractual PILON payments are taxed as income; in others, ex-gratia PILON payments above a threshold may receive favourable treatment. These distinctions require local legal and tax advice and affect the net cost and value of the arrangement to both parties.

Notice Period and Severance

Notice pay is typically the largest single component of a severance package for senior consultants — particularly where the notice period is long. In markets with additional statutory redundancy entitlements, notice pay sits alongside (not instead of) the statutory payment. The interaction between notice period obligations, garden leave, PILON and statutory entitlements requires careful management to ensure the firm meets its legal obligations while controlling total exit cost. See Redundancy and Non-Compete.