Payment in lieu of notice (PILON): what it means

By the HRPricing editorial teamReviewed October 18, 2026How we research and score

Payment in lieu of notice (PILON) means an employer pays you the wages for your notice period instead of having you work it, so your job ends right away. In the UK, GOV.UK says employment can end without notice if PILON is in your contract, and an employer may offer it even if the contract does not mention it. Statutory notice runs from one to 12 weeks.

Payment in lieu of notice (PILON): a payment equal to the wages an employee would have earned during their notice period, made so that employment ends at once instead of at the end of the notice.

On this page
  1. How payment in lieu of notice works
  2. UK notice periods and a PILON example
  3. Notice pay in other countries
  4. Payment in lieu of notice in the US

How payment in lieu of notice works

"In lieu" means "instead of." Rather than keep you working, or at home on full pay, for the notice period, the employer ends the job now and pays that period's wages. GOV.UK says you get basic pay for the notice period, plus extras such as pension contributions or private health insurance if they are in your contract. Wages in lieu of notice and salary in lieu of notice mean the same thing.

Garden leave is different: you stay employed and paid through the notice period but are told not to work. PILON is also not severance, which pays for job loss rather than for notice.

UK notice periods and a PILON example

UK statutory minimum notice from the employer
Length of serviceMinimum notice
1 month to under 2 years1 week
2 to 12 years1 week per full year
12 years or more12 weeks

Source: GOV.UK redundancy notice periods (page last updated Nov 8, 2024, more than a year old; the same minimums are in our UK country data), checked Oct 18, 2026.

Example: an employee with 6 full years of service earns GBP 39,000 a year, or GBP 750 a week. Statutory notice is 6 weeks, so PILON is at least GBP 4,500 plus any contractual extras. If the contract gives 3 months, the contract applies: employers can give more than the minimum but not less. GOV.UK points to separate guidance for tax and National Insurance on notice pay. UK hiring costs are in UK employment through an EOR and leave rules in UK leave entitlements.

Notice pay in other countries

Statutory notice rules, selected countries
CountryRule
Germany4 weeks to the 15th or end of a month, rising with service to 7 months at 20 years (BGB s.622)
Canada (federal)2 weeks after 3 months, rising to 8 weeks at 8 years (federal labor code, s.230); provinces differ
MexicoNo statutory notice period; dismissal needs written notice of the cause (LFT art. 47)
PhilippinesAuthorized-cause termination: written notice to the worker and DOLE at least one month ahead

Sources: official labor law texts in our country data, checked Oct 16 to 17, 2026.

If you employ through an EOR, expect notice pay and severance to be billed to you on top of the monthly fee; ask for this in writing. Compare countries in the EOR cost index and providers in the best EOR services.

Payment in lieu of notice in the US

US federal law has no general notice rule for an ordinary termination. The federal WARN Act requires advance notice of qualified plant closings and mass layoffs (US Department of Labor), and some employers pay wages for the notice period instead. Federal law also sets no deadline for a final paycheck; some states require immediate payment (DOL). Any notice pay runs through payroll as wages. See payroll compliance rules.

Frequently asked questions

What does payment in lieu of notice mean?
It means your employer pays the wages for your notice period instead of having you work it, and your employment ends right away.
What is a PILON payment?
PILON is short for payment in lieu of notice. In the UK it covers at least your basic pay for the notice period, plus contractual extras such as pension contributions (GOV.UK).
Can my employer pay me in lieu of notice if my contract does not mention it?
In the UK, yes. GOV.UK says an employer may offer payment in lieu of notice even if the contract does not mention it, and employment can end without notice if PILON is in the contract.
Is pay in lieu of notice the same as severance?
No. PILON replaces the notice period. Severance or redundancy pay compensates for losing the job, and you can be owed both. In the UK, statutory redundancy pay starts after 2 years of service.
Do US employers have to give notice or pay in lieu?
Usually not under federal law. The federal WARN Act requires advance notice for qualified plant closings and mass layoffs (US Department of Labor), and some employers pay wages in lieu of that notice. Check your contract and state law as well.
Sources (7)
  1. GOV.UK: Redundancy: notice periods (last updated Nov 8, 2024; checked Oct 18, 2026)
  2. GOV.UK: Redundancy pay (checked Oct 16, 2026)
  3. US Department of Labor: Worker Adjustment and Retraining Notification (WARN) (checked Oct 18, 2026)
  4. US Department of Labor: Last paycheck (checked Oct 16, 2026)
  5. Gesetze im Internet: BGB section 622 (notice periods) (checked Oct 16, 2026)
  6. Justice Laws Website (Canada): Canada Labour Code section 230 (checked Oct 16, 2026)
  7. Camara de Diputados (Mexico): Ley Federal del Trabajo (checked Oct 16, 2026)

This page is general information, not tax, legal or accounting advice. Rules and rates change, so check the official source linked above before you file or sign a contract. Read our disclaimer.