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Pay In Lieu Of Notice (PILON) |
PILON may be paid where the employer does not want the employee to work out their notice. Where the employee is paid in lieu, the date of termination is the date on which the employee last works, not the date at which the notice would have expired.
It is not an automatic right for organisations to insist that employees take pay in lieu of notice - unless specifically provided for in the contract. In reality however, few employees would refuse such an offer.
Pay in lieu of notice is usually taxable given that it compensates for monies that would have been due/are due under the contract. Some organisations however choose to omit a PILON clause from the contract so that any monies for pay in lieu could be paid tax free. If you choose to go this route, be aware that if you then pay in lieu, you effectively breach the contract which is likely to result in all the other clauses including confidentiality and restraint of trade being voided.
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