Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Payment In Lieu Of Notice definition

What does Payment In Lieu Of Notice mean? Payment in lieu of notice (PILON) is a payment by an employer that ends employment immediately instead of the employee working their notice period. It is a descriptive employment-law term used across the UK and Ireland and operates primarily as a matter of contract, with its effect informed by case law. Where the employment contract contains an express PILON clause, the employer may terminate summarily by making (and usually notifying) a payment calculated by reference to the contractual or statutory notice period. Drafting should state what is included (basic pay only or also benefits/bonus), the timing of payment...

Payments in Lieu of Notice (PILON): Contractual vs Non-contractual, Drafting and Calculation, Post-termination Restrictions, Mitigation and Notification, Tax (PENP), Directors’ Governance and Public Sector Rules

Published by a LexisNexis Employment expert

Practice notes

This Practice Note

This Practice Note sets out why employers include a Payment In Lieu Of Notice (PILON) clause and how operating a PILON affects the employee's notice period and the termination date. It distinguishes between contractual and non-contractual PILONs, and considers PILONs in the contexts of immediate termination, breach of contract, wrongful Dismissal and post-termination restrictions. The discussion of contractual PILONs also addresses mitigation, notification requirements and gross misconduct. Practical drafting guidance is provided to enhance employer flexibility when combining a PILON with other termination arrangements, such as garden leave, and regarding the timing, calculation and payment of PILONs. The Note also outlines the tax treatment of PILONs and flags issues to bear in mind for payments to directors, including the requirements of the UK Corporate Governance Code. It confirms that the right to notice is a right for the employee to remain in employment throughout the notice period, rather than simply to be paid for it...

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

Web page updated on 21/05/2026

Popular documents

Using the Judicial College Guidelines to assess general damages in personal injury claims

When evaluating a general damages claim, the practitioner ought initially to refer to the Judicial College Guidelines (JCG)...

Tomlin orders in England and Wales: CPR guidance on drafting, confidentiality, approval, variation, enforcement, limitation, CCA issues, court-specific requirements, sample wording and precedents

This Practice Note This Practice Note reviews mechanisms used in settling litigation. A Tomlin order consists of a consent order paired with a schedule. It operates to stay proceedings on terms that have been agreed. The provisions contained in the schedule may remain confidential. This Practice Note describes the scope of confidentiality attaching to the schedule and sets out how it differs from a standard consent order. Sample wording for a Tomlin order is included, alongside links to precedents, as well as guidance on court approval. It also addresses varying, setting aside and enforcing a Tomlin order, including the considerations the court will take into account when handling applications for each. Further guidance is provided on interpreting and applying the relevant provisions of the CPR; however, some courts and divisions impose very specific requirements for both drafting and approval, and for approaching the schedule and confidentiality issues. Accordingly, you must consider the particular rules and court guide provisions in the forum where your claim is proceeding when drawing up the Tomlin order...

Precedent: Deed of Surrender of Lease with Optional Premium, Settlement and Release, Landlord, Mortgagee and Guarantor Consents, Reimbursement and HM Land Registry Provisions (England and Wales)

Date [ date ] Parties [ name of Landlord ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Landlord) [ name of Tenant ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Tenant) [ [ name of Guarantor ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Guarantor) ] [ [ name of Mortgagee ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Mortgagee) ] Definitions Within this Deed, the terms below shall be interpreted as follows: [ Annual Rent • the annual sum reserved under the Lease; ] [ Insurance Rent • the Tenant’s share of the Landlord’s costs of insuring the Property (as set out in the Lease); ] Lease • the lease of the Property dated [ date ], entered into between (1) [ the Landlord OR [ name ...

Precedent Statutory Declaration: Standard Wording under the Statutory Declarations Act 1835

I, [ name ], of [ address ], solemnly and sincerely state that: [ Matters to be verified, set out in numbered paragraphs ] I make this solemn statement in good conscience, believing it to be true, and pursuant to the provisions of the Statutory Declarations Act 1835. DECLARED at [ details ] this [ day ] day of [ month and year ] Before me ................................................................................ [ signature of the person before whom the declaration is made ] A [ commissioner for oaths OR [ solicitor OR [ insert other qualification ] ] authorised to administer oaths ]...