Employer refused to pay notice…

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A PILON clause means you can bring the employment to an end before your exiting employee serves their notice.

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A recent case saw an employee hand in their notice but refused to work their four week notice period. Why? Because their now ex-employer notified them not to return despite the contractual obligation to work and pay notice and no breach of contract was committed. Was there a discussion or signed agreement as to whether the employee would still be paid their notice pay [payment in lieu of notice also known as PILON, or waiver of notice period]? No. No discussion took place and no notice pay was provided. The outcome? The former employee issued pre-tribunal proceedings via ACAS for unlawful deduction of wages.

Employees not working their notice periods can be a headache or a blessing! It has been a headache for this employer. To be clear, as an employer, as long as you have not breached the contract, you do not have to pay someone their notice if they refuse to work it.

Employees will normally be contractually obligated to work their notice period. The statutory notice period for an exiting employee is one week – if they have been working for you for one month or more. Contractual notice is at the employer’s discretion where its common to have written into contracts that staff must give a minimum of one month’s notice. If staff sign the contract, they must adhere to the terms.

It might be worth considering or reconsidering the contracts you offer if they have long notice periods. For example, when someone decides to leave they may not want to serve a three month notice period or even a month long notice period. Be smart with the length of notice periods. Consider setting each one according to the level of seniority of a role. For example, a junior position where neither replacing or training someone will take long. Is keeping them around for longer than a week worth it? Possibly not.

You may have an exiting employee with a month’s notice in their contract who decides they do not wish to work more than two weeks. Here, it is best to ensure you include a clause in their contract that deducts pay for any notice period that is not worked.

A PILON clause means you can bring the employment to an end before your exiting employee serves their notice. You are still required to pay them the full notice period. 

You may decide it’s in your best interest to try to agree with your exiting employee to waive their notice, and terminate the contract with immediate effect. In this situation, you would not need to pay for their notice. Just ensure that both parties sign some form of written agreement. Unlike my previous case example, you can avoid a later claim for unlawful deduction of wages.

If in doubt of your employment needs and/or requirements, do not hesitate to contact us here at Lawgistics.

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