<P> If a notice period such as one month is required for an employer to terminate a contract, a' payment in lieu of notice' is immediate compensation at an amount equal to that an employee would have earned as salary or wages by working through the whole notice period: for example, one month's salary . A payment in lieu will include payment for holiday entitlements if the employee has them . </P> <P> PILON can either be set out in the contract as an option for the employer, or it may simply be paid to cover any potential damages for breach of contract . </P> <P> If there is a pay in lieu of notice clause in the employee's contract, the amount the employee will get will normally be set out there . If not, it is up to the employee to agree to an amount . Sometimes, employees may be willing to accept a small amount if it is in their interests to leave early . The amount to be paid will normally cover all salaries that would have been earned during the notice period . </P> <P> That will normally cover basic pay and may include other things like commission and compensation for the loss of benefits, like personal use of a company car, phone, or medical insurance . The employer might instead decide to give the use of the benefits for the notice period . If employees think that the amount the employer is offering does not match what they would have earned, they can still consider making a breach of contract claim . </P>

Payment in lieu of notice or gardening leave