How to make a payment in lieu of notice

Author: Darren Newman

Summary

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• Consider including a right to terminate with a payment in lieu of notice in employment contracts.
• When dismissing an employee, decide whether to dismiss with or without notice.
• Consider whether or not a period of garden leave may be more appropriate.
• When dismissing an employee without notice, take care to protect confidential information and recover company property when appropriate.
• Clearly explain the position to the employee in writing, including the precise end date of the employment, and make the payment in lieu of notice promptly.
• Ensure that a payment in lieu of notice is correctly labelled as such when it is made.
• Include sums covering benefits in kind in the payment in lieu of notice, unless the contract provides otherwise.
• Be aware that all payments made in lieu of notice are taxable.