Witholding pay for not giving enough notice

Is it a penalty or a reasonable deduction from pay?

I am asked regularly what the consequences would be if an employee leaves without giving sufficient notice. More often than not, within the employees terms and conditions, there is a contractual duty to work the required notice, and if the employee fails to do so, the employer then has the ‘right’ not to pay the notice or deduct a weeks pay if they work a week or more in hand.

But, a clause which purports to withhold pay if the correct notice is not given may, and I repeat ‘may’, be considered either:

• a penalty clause or,

• a genuine pre-estimate of loss, depending on the specific circumstances of the case.