A contract of employment may contain a term permitting the employer to make a ‘payment in lieu of notice’ on termination of employment. This is when your employer reserves the right to pay you an amount instead of requiring you to work out your notice period. If your contract does not contain such a term then you do not have to accept payment in lieu. In other words you could insist on working through the notice period, although your employer might agree that you do not have to attend work during the notice period.
If you accept the waiving of all or part of the notice period the effective date of termination is the date of acceptance of the payment in lieu, rather than the date the notice would normally have expired. This could considerably shorten the length of service with your employer and possibly affect redundancy payment, entitlement to claim unfair dismissal and pension entitlements. If in doubt about the consequences of accepting a payment in lieu where this is not provided for by your contract, speak to your union rep or a legal advisor.
