payment in lieu of notice Archives - EMPLOYEE BENEFITS BLOG

Protecting Your UK Business Against Departing Employees

Departing employees can represent a significant threat to UK business. This is particularly so in the case of senior managers and employees who have access to confidential information or who exert influence over key relationships with actual or prospective customers, suppliers or key members of staff.

Many employers seek to manage this threat by obtaining an employee’s agreement to a broad range of contractual post-termination restrictions (PTRs), often referred to as restrictive covenants. PTRs are generally designed to protect a business against a range of threats: former employees working for competitors, soliciting clients and poaching employees, etc. When they work, PTRs can be a very effective weapon in an employer’s arsenal, but there are potentially significant hurdles that must be overcome before they will be enforced by the UK courts.

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UK Employment Alert No 206: How to Terminate Employment and Exercise a Payment in Lieu of Notice Clause

by Sharon Tan and Paul McGrath

The UK Supreme Court has provided guidance about two issues of importance for employers wishing to dismiss a UK employee:

What happens when an employer dismisses an employee in a manner that breaches the terms of the employee’s employment contract? Is the employment relationship immediately brought to an end despite the employer’s breach, or does it continue?

If an employer wishes to rely on a payment in lieu of notice (PILON) clause, is it enough simply to make the payment of money required by the PILON clause, or is something more required?

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