Pay in lieu of notice and holiday explained

The most common query I ever have to deal with relates to holiday calculation and notice/payment in lieu of notice.

I’ll set out an example to illustrate:

Today is 15 May 2023. An employee gives their notice of 1 month today, so their employment would end on 15 June 2023. Their holiday will be calculated to 15 June 2023.

However, if the employer decides they don’t want them to work out their notice and agrees instead to make a payment in lieu of (instead of) notice then the end of employment will be 15 May 2023. Holiday will be calculated to today’s date. The employee will be paid 1 months’ salary and benefits including any holiday to today’s date in their final pay.

Refreshing Law Ltd
15 May 2023