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Payment in lieu of notice

Produced by Tolley in association with
Employment Tax
Guidance

Payment in lieu of notice

Produced by Tolley in association with
Employment Tax
Guidance
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The right to notice means the right for the employee to remain in employment for the period of notice, not simply to be paid for it. An employer will therefore often include in the contract an express right to make a payment in lieu of notice (PILON) as an alternative to giving notice, to ensure they have the option of terminating the employee's employment with immediate effect and removing the employee from the workplace at any time.

See the Contractual terms guidance note.

However, even in the absence of such an express right, an employee may be willing to bring their employment to an early end and accept a 'non-contractual' payment in lieu of the notice to which they are properly entitled (or, more likely, the employer might simply terminate the employment and make such a payment, which in many cases will effectively extinguish the employee’s wrongful dismissal claim).

Contractual PILONs

Protection of post-termination restrictions

The primary reason for an employer to include a PILON clause in the contract of employment

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Hannah Freeman
Hannah Freeman

Barrister at Old Square Chambers , OMB, Employment Tax


Hannah is an experienced employment law specialist advising on all forms of discrimination, maternity and paternity rights, unfair dismissal, contractual disputes, part-time working and TUPE. Hannah acts for claimants and respondents in both the public and private sectors, including the NHS, the police, local authorities, educational institutions, financial services and the hospitality industry, as well as providing training and support to in-house legal and HR teams.

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  • 15 Nov 2022 16:19

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