Employer notice pay calculator

Under the Employment Rights Act 1996 s.86, the statutory minimum notice you must give an employee depends on their length of continuous service: 1 week after 1 month; then 1 week per complete year of service from 2 years up to 12 weeks maximum at 12+ years. You must give whichever is greater — the statutory minimum or the contractual notice period specified in the employee's contract.

Yes. You can pay in lieu of notice (PILON) instead of requiring the employee to work through their notice period, provided the employment contract includes an express PILON clause or the employee agrees. Since April 2018, all PILON is fully taxable as earnings — deduct income tax and National Insurance through payroll as normal. PILON must be at the employee's full contractual rate of pay for the notice period.

Garden leave means the employee remains employed and continues to be paid but does not work. It keeps them bound by their employment contract (including confidentiality and non-compete obligations) for the duration of the notice period. It is most appropriate for senior employees with access to sensitive client relationships or information, where immediate departure would pose a business risk. Your contract should include an express garden leave clause to rely on it.

Yes — all notice pay (including PILON) is fully taxable as earnings and subject to income tax and employer/employee National Insurance contributions. Since April 2018, PILON does not benefit from the £30,000 termination payment exemption regardless of whether it is contractual or non-contractual. Process it through payroll using the employee's current tax code.

Dismissing an employee without notice (or pay in lieu) — unless for genuine gross misconduct — is wrongful dismissal. The employee can bring a breach of contract claim at the Employment Tribunal (up to £25,000) or in the county court. The claim value is typically the pay they would have received during the notice period. Wrongful dismissal claims can be brought from day one of employment — no 2-year qualifying period applies.