Breakdown
How it works
After one month's service an employer must give one week's notice, rising to one week per complete year up to twelve. Your contract can give more but not less. Payment in lieu of notice (PILON) is taxable in full since 2018. Untaken holiday is paid at your daily rate.
Formula
Statutory notice = min(12, complete years) weeks (1 week after 1 month)
Notice pay = max(statutory, contractual) weeks × weekly pay
Holiday pay = untaken days × weekly pay ÷ days per week
Worked example
6 years' service, £700 a week, 4 weeks contractual, 5 days' holiday: 6 weeks' notice = £4,200 + £700 holiday = £4,900.
Frequently asked questions
Is notice pay tax-free?
No — PILON and holiday pay are taxed as earnings. Only genuine redundancy or compensation payments benefit from the £30,000 exemption.
Does notice count towards redundancy service?
Yes — if your statutory notice would take you past a service anniversary, the extra year counts for redundancy pay.
Can I be put on garden leave?
Yes, if your contract allows it; you remain employed and paid but do not work.