PILON

[wheelsonthebus]

Can anyone advise please - If PILON (pay in lieu of notice) is not in your contract, but a month's notice is, can you insist on working your notice/going on gardening leave, rather than get PILON. I want to continue to be in the 'full' employ of my company for another month.

Yes your employers need to do what is stated in your contract of employment. So they should give you a month's notice during which time you attend work or go on gardening leave. My company have an annual leave policy which states that you should try to use up a/l before leaving.

If your employer forces you to take PILON you could claim wrongful dismissal, however the compensation for this is really only the reinstatement of the contractual notice period and any monies/benefits due to you during that period.

HOWEVER some unscrupulous employers have used PILON because letting their employee work their notice period would have given them the 12/24 months service required to make an unfair dismissal claim and/or a bonus would have been payable to the employee during the notice period. Is that what your employer is up to?

It is possible for an employer to pay you in lieu of notice if they are not contractually entitled to do so.

However, doing so would technically be a breach of contract, so the amount they would need to pay you would be effectively damages rather than contractual notice pay, and would need to be sufficient to compensate you for any losses incurred by not being permitted to work your notice period. Normally this would equate to salary and benefits you would have received but sometimes may be more.

If working your notice period would tip you over the length of service needed for something, then, depending what is it you'd lose out on, they'd either have to compensate you sufficiently to prevent you bringing a wrongful dismissal/breach of contract claim, or (probably) it wouldn't be worth doing.

Can you be more specific?

thanks for your advice. V helpful. Yes, it is exactly what my employer is up to. If I worked my notice/was on gardening leave, I would be entitled to extras which I will not qualify for otherwise. The extras aren't worth a huge amount but I should get them nonetheless. Can I also ask - how often is PILON paid gross (so the employee gets their gross monthly salary) and how often is it paid as if it were net when it isn't (so the company pockets the extra).

If a PILON is contractual it is taxable, so will be paid net, but the employer will not be pocketing the extra, but sending it to HMRC. If it is a payment for breach of contract (as Flowery described) it may be tax free up to a £30k limit. It is often assumed that the first £30k of any leaving payment is tax free, but that is not always the case.

If it's damages, that would normally be tax free, and as they are just compensating you for actual financial loss, there is a possibility they may just pay you the net amount you would have received and effectively pocket the difference. You would not be incurring financial loss as you would only have received the net amount only so would be unlikely to bother looking at a claim of any sort.

In practice, that's pretty unusual I'd say, and where PILON is in effect damages and consequently tax free, it's more usual to pay the gross amount to the employee.

Basically you need to get straight exactly what you'd be getting, and get straight exactly what your financial losses would be from not working your notice period, and make sure they tally up.