Workers leaving: notice periods
What notice needs to be given and pay during, or in lieu of notice.
The required notice period is the statutory amount or the amount agreed in the contract of employment, whichever is longer.
The employee's required notice period must be given in their written statement or the statement must refer to the relevant legislation on notice periods. See how to issue the correct periods of notice.
To avoid disputes, most employers specify that notice must be given in writing.
Pay during notice
Employees who work the hours set out in their contract during the notice period should receive their usual rate of pay.
Employees are also generally entitled by law to receive their normal pay during the notice period even if they do not work, for instance, because they are ill or because they are willing to work but you do not give them any to do.
Pay in lieu of notice
If you want employment to end immediately, you can make a payment instead of allowing the employee to continue working - a payment in lieu of notice (PILON). However, you can only make a PILON if the contract allows for this or your employee agrees to it.
A PILON should cover salary - including any bonus required under their contract - until the end of the notice period together with the cash equivalent of benefits in kind, unless their contract says otherwise.
Pay for untaken outstanding holiday
Pay owed to the employee for any accrued untaken holiday should be paid in addition to pay in lieu of notice.
For more information, see holiday pay on termination of employment.