Should PILON be based on full weekly pay?

sallyanny

Hi - my sister is in the process of being made redundant after working for a company for 15 years. She's entitled to 12 weeks' notice, and has worked 5 of them. She's been told that the remaining 7 weeks pay in lieu of notice will be capped at £380 per week, same as her redundancy pay, even though her weekly wage is higher than this. Does this sound right? Anything I've been able to find online suggests that she should get 7 full weeks' pay.

zzzLazyDaisy

Payment in lieu of notice is NOT subject to the statutory cap.

Your sister is entitled to be paid her full salary, and provided there is no PILON clause in her contract (which would be unusual) she should also be paid this is a lump sum without deduction of tax or NI.

If she needs more information about this she should phone ACAS for free advice about her employment rights, or speak to CAB.

Also she should make sure that she is paid for any holidays outstanding but not taken, which should include the holidays that she would have accrued had she worked the remaining 7 weeks' notice.

Pete111

zzzLazyDaisy wrote: »

Payment in lieu of notice is NOT subject to the statutory cap.

Your sister is entitled to be paid her full salary, and provided there is no PILON clause in her contract (which would be unusual) she should also be paid this is a lump sum without deduction of tax or NI.

If she needs more information about this she should phone ACAS for free advice about her employment rights, or speak to CAB.

Also she should make sure that she is paid for any holidays outstanding but not taken, which should include the holidays that she would have accrued had she worked the remaining 7 weeks' notice.

+1

LD is absolutely correct here - that is very poor behaviour by the employer.

My only caveat would be re tax on the notice HMRC can be hot on this even when no PILON clause is present but it is definitely worth pushing.

sallyanny

Thanks to both of you - just the answer we wanted!

SarEl

zzzLazyDaisy wrote: »

Your sister is entitled to be paid her full salary, and provided there is no PILON clause in her contract (which would be unusual) she should also be paid this is a lump sum without deduction of tax or NI..

I should, however, point out that this does not necessarily mean that she will get more money in her pocket. Depending on the conditions and contractual terms, PILON is often paid at the net wage not the gross wage. It still does not attract tax or NI, but it doesn't always mean that you attract the tax and NI money!

SevenOfNine

My PILON was paid gross and, as with the rest of my salary (apart from my redundancy pay), I paid tax and NI on it - just as I would have if I'd worked the notice period.

Only thing my employer did, which I think was incorrect, was that they did not deduct anything from it for my employers pension scheme. Which also means they did not pay in their element of contribution either.