What is PILON?

A payment in lieu of notice clause (or “PILON”) in an employment contract creates a contractual right to pay an employee a lump sum rather than require them to serve out their statutory or contractual notice period.

If there is no PILON clause then an employer who pays a PILON instead of requiring the employee to serve their notice period will be in breach of contract, and the PILON therefore represents damages for that breach.

There are tax implications relating to payment to an employee under a PILON.

Farore Law is a leading boutique law firm that has a wealth of experience in advising senior executives on employment matters. We are well placed to provide appropriate advice regarding the enforceability of contractual terms, seeking a settlement agreement and commencing or defending litigation in the High Court or the Employment Tribunal.

Please contact us if you require legal advice.