Payment in lieu of notice & Garden leave

A payment in lieu of notice in your settlement agreement means that your employer pays your salary, and perhaps also benefits, for your notice period, but you do not have to work during that time.

Pay in lieu of notice is also known as PILON for short. Sometimes it’s also referred to as wages in lieu of notice. ‘In lieu’ means ‘in place of” or ‘instead of” in French, so you receive notice pay instead of working your notice period.

For example, if an employee has a three month notice period, the employer might decide that they want today to be the last day of your employment – but they will be paying your wages in lieu of this notice for three months, even though you are not physically coming in to work any more.

It is very common to find PILON in settlement agreements. This is because such agreements tend to occur after either a dispute or a redundancy and there is some reason why your employer prefers not to continue to interact with you on a day to day basis. Therefore they often do not want you to be in the office once the relationship has broken down.

This is slightly different from being put on garden leave which means that you are told not to work, but are also not permitted to take another job with a competitor for a certain length of time. With garden leave you would normally be paid at the end of each month as usual, and you still remain technically employed, so theoretically your employer could call on you to do more work. When you are paid in lieu of wages, you do not remain employed.

Full transcript:

In this video I'm going to talk about
payments in lieu of notice and garden
leave so what is payment in lieu of notice
onto your contract your employer will
have an obligation to give you a certain
amount of notice to terminate your
employment sometimes they can terminate
your employment straight away and rather
than you working that notice period
they'll pay you a lump sum for example
if you're entitled to one month's notice
you'll be terminated immediately and
you'll be paid a month's pay this is
especially valuable if you have a long
notice period because you can start a
new job straight away subject to any
post termination restrictions you may
have in your contract such as a
non-compete so you could be paid for
your notice period and be starting a new
job already
a payment in lieu of notice can often be
available from your employer if there's
been some kind of dispute in the
workplace this is because your employer
often wants you to leave quite quickly
and would prefer not to have you around
if there may be a negative impact on
your colleagues at work so it can be
just a case of asking your employer to
give you a payment in lieu of notice
obviously if you're trying to negotiate
your exit if they do offer a payment in
lieu of notice try not to show your
cards that you're too pleased about this
and just carry on negotiating it X
greater part of your settlement package
be aware that a payment in lieu of
notice will be subject to the usual
detection x' for income tax and national
insurance
unlike the expiration part of a
settlement payment under 30,000 which
isn't subject to any deductions you
should check your contract of employment
to see if it mentions payment in lieu of
notice sometimes an employment contract
will say that an employer only has to
pay basic salary if your notice period
otherwise if there's no mention of that
in your contract you can argue that you
should be paid both your benefits and
pension contribution for that period
you're not usually entitled to any bonus
for payment in lieu of notice or to any
holiday that you would have accrued had
you worked through a notice period so
sometimes you can end up being paid less
if you are paid anew of notice than if
you worked your notice period but
obviously you have to balance that with
the benefit of not having to work your
notice very
topic two you looking now at garden leave
sometimes rather than you working your
notice period or paying you live notice
your employer will ask you to leave the
work place at the beginning of your
notice period and you don't have to come
back to work however you do stay an
employee and you're paid as usual during
your notice period the idea is that you
can spend your notice period sat in your
garden but be aware that you can't work
for anybody else whilst your own garden
leaf you must wait until the end of your
employment before you can get a new job
however there's nothing to stop you
looking for a new job garden leaf can be
beneficial if it's helpful to extend the
length of your employment this is
because it can be easier to find a new
job if you're still in a job so that's
the end of my short video on payments in
lieu of notice and garden leave I hope
it's been helpful if you like any
further information on these topics
please have a look around the website
and there's plenty to find there or do
get in touch with us for your free
consultation