Payment in lieu of notice (PILON)

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.

For more information, see Practice note, Notice of termination of employment: Payment in lieu of notice.