In Lieu of Notice

If your employer terminates your employment without giving the necessary statutory or contractual notice, they should make a payment In Lieu of Notice (also called severance pay).  Unless you have been dismissed because of gross misconduct.

Pay In Lieu of Notice is not earnings it is a payment of damages for breach of contract and is not to be confused with an advance payment of wages.

(If you are dismissed with the proper notice, but are not required to work during the notice period and if you are paid your usual wage for the notice period in a lump sum, this money is called an Advance Payment of Wages and is not pay In Lieu of Notice. A common name is for this is 'Garden Leave').

How much pay In Lieu of Notice you are entitled to will depend on:

• How much notice you are entitled to.
• The rate of your normal wages.

E.g:  If you are entitled to four weeks' notice, but are only given one, you will be entitled to three weeks' pay in lieu of notice but you may be entitled to more than this, depending on what your contract of employment says.

The amount you receive, if your working hours vary, will be based on your average weekly pay for the 12 weeks immediately before your notice is due to start.

Whether or not tax and/or national insurance should be deducted from pay in lieu of notice depends on what is in your contract of employment. If your contract of employment does not allow for payment to be made in lieu of notice, and your employer dismisses you without giving notice, any pay in lieu will be damages for breach of contract. You should therefore not have tax and national insurance deducted from the payment.

If your contract does allow for you to be given pay In Lieu of Notice, and you are given the correct amount of pay in lieu, you have no right to work your notice. This applies even if the major part of your wage comes from commission.

Contact your local Citizens Advice Bureau if you need further help or information about pay in Lieu of Notice.