Payment in lieu of notice (PILON)

Published by a ��˾��ҹ�� Employment expert

Practice notes

Payment in lieu of notice (PILON)

Published by a ��˾��ҹ�� Employment expert

Practice notes

The right to notice means a 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 and removing the employee from the workplace at any time. Employers are particularly likely to favour inclusion of such an option in circumstances where there are concerns about competition by former employees.

Providing a lawful means of immediate termination, such as a PILON clause, is important because attempted summary dismissal in breach of contract by the employer will not be effective in terminating the contract unless and until the employee chooses to accept that repudiation.

However, even in the absence of such an express right, an employee may be willing to come to an agreement to bring their employment to an early end and accept a 'non-contractual' payment in lieu of the notice

Jurisdiction(s):

United Kingdom

Key definition:

Payment In Lieu Of Notice definition

What does Payment In Lieu Of Notice mean?

Payment In Lieu Of notice (‘PILON’) clauses give the employer the express right to make a payment instead of giving notice, allowing the employee’s immediate termination and removal from the workplace. In the absence of a contractual PILON, employees may remain in employment for the notice period and be paid for it, and attempted summary dismissal will be ineffective unless the employee accepts that repudiation.

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