Employer notice pay calculator
Calculate the statutory notice pay you owe a departing employee, or the cost of putting them on garden leave. For UK employers. This is an educational estimate, not legal advice.
Employer email template
Subject: Request for final pay review
I am writing to ask you to review my final pay. Based on the information available to me, I believe the amount or deadline may not match the applicable rule. Please confirm the calculation, the pay period covered, any deductions, and the expected payment date.
Wage claim checklist
- OK Final payslip or pay statement
- OK Employment contract or handbook policy
- OK Dates worked and termination/resignation date
- OK Written request sent to employer
- OK Official state or country claim link
Statutory notice obligations for UK employers
The Employment Rights Act 1996 s.86 sets the minimum notice you must give an employee before terminating their employment. The statutory minimum runs from 1 week (after 1 month's service) to 12 weeks (after 12 or more years). Your employment contracts may specify a longer notice period — you must honour whichever is greater.
PILON vs garden leave — cost implications
Both options cost the same in base salary terms, but garden leave carries additional employer costs: pension contributions continue, benefits (private medical, company car etc.) continue to accrue, and the employee may continue to earn commission or bonus on deals that close during the period. PILON ends these obligations immediately on the termination date. For employees with significant benefits, PILON is usually the lower-cost option.
Notice pay and the termination payment tax rules
Since 6 April 2018, all notice pay — whether worked, garden leave, or PILON — is fully taxable as earnings and subject to both income tax and National Insurance contributions. Notice pay does not benefit from the £30,000 termination payment exemption. You must deduct tax and NI through payroll. The £30,000 exemption applies only to genuinely non-contractual payments such as ex gratia payments and statutory redundancy pay.
Frequently asked questions
What is the minimum notice I must give an employee?+−
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.
Can I pay in lieu of notice instead of requiring the employee to work?+−
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.
What is garden leave and when should I use it?+−
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.
Is notice pay taxable?+−
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.
What happens if I dismiss an employee without giving notice?+−
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.
Legal basis and primary sources
All statutory figures are sourced directly from official government legislation and guidance. See our methodology →