Noticepay

Noticepay is a term used in employment and labor law to describe compensation provided to an employee during the notice period that follows the termination of employment or a resignation. It can refer to two related concepts: wages for a notice period when the employee continues to work through the notice, and payment in lieu of notice (PILON), where the employer ends the contract immediately but pays the employee an amount equivalent to what would have been earned during the notice period. In some arrangements, an employee may be placed on garden leave, receiving pay and benefits while not performing duties or reporting to work.

Calculation and components: Notice pay generally covers the employee’s base pay for the duration of the notice period. Depending on the contract and applicable law, it may also include regular overtime, commissions, bonuses, and certain employer-provided benefits. Statutory deductions such as taxes and social contributions apply as with ordinary wages. The length of the notice period is determined by the employment contract, collective agreements, or statutory requirements and can range from a short number of weeks to several months.

Legal context and variation: Notice obligations arise from contract terms, statutory requirements, or court orders. If the contract specifies a longer notice period or higher pay than statutory minimums, those terms typically govern. Jurisdictional rules differ: some regions permit or require PILON, others restrict it, and some place limits on the use of garden leave. Employers and employees should refer to the relevant contract and local labor laws to determine exact rights and obligations.

See also: termination pay, severance, pay in lieu of notice, garden leave.