Compensatory Notice Pay Calculator
When employment ends without the notice period being worked, the pay for that unworked notice does not vanish: it is owed as compensatory notice pay, called payment in lieu of notice, or PILON, in the UK. Getting the figure right means combining the notice you were entitled to, the pay you would have earned, and the extras like benefits and unused holiday that ride along with it.
The Quick mode prices a simple case in seconds: weekly pay times notice weeks. The UK PILON builder does the full job: it converts your salary to a weekly rate, works out your statutory notice from your years of service, takes the higher of statutory and contractual notice, subtracts any notice already worked, and adds benefits and accrued holiday pay into one itemised total.
Every total here is gross, before income tax and National Insurance. The tool displays amounts in pounds sterling (£), in line with the UK PILON cases it is built for. This is a calculation aid, not legal advice: PILON clauses, settlement terms, and wrongful dismissal claims need an employment adviser.
Quick Answer
Key takeaways
- Notice owed is the higher of your contract and the statutory floor: one week from one month to two years of service, then one week per full year, capped at 12 weeks.
- Only the unworked balance is paid in lieu. Notice you already worked was ordinary pay, and the builder subtracts it before pricing anything.
- Benefits and accrued holiday are separate lines, not rounding errors: in the worked example they add £848.39 to a £4,986.57 notice payment.
- The totals are gross. Since April 2018, notice pay is taxed as earnings in full under the post-employment notice pay rules, so the amount that reaches a bank account is smaller.
- Quick Answer
- How to use the compensatory notice pay calculator
- How compensatory notice pay works
- Worked examples: the quick price and the full build
- UK statutory notice periods at a glance
- Tax treatment: why the gross total is not the amount you keep
- Worked notice, garden leave, or PILON: three ways to end the same weeks
- What competing tools miss
- Frequently Asked Questions
- Add This Calculator to Your Website
- References
How to use the compensatory notice pay calculator
Use Quick mode when you already know the two numbers: weekly pay and the unworked notice weeks owed. It is the right tool for checking a figure in a settlement letter or pricing a simple agreement where notice entitlement is not in dispute.
Use the UK PILON builder when entitlement itself needs working out. Enter your salary in whatever frequency you are paid, your working days per week, and your completed years of service, and the builder derives your weekly pay and your statutory notice for you. Add your contractual notice in weeks (0 if your contract is silent), subtract any notice weeks you already worked, then add the weekly value of benefits that stop at termination and your accrued untaken holiday in days. If you track leave in hours rather than days, convert it first with the annual leave hours to days calculator so the holiday line is priced in the same units the builder expects.
How compensatory notice pay works
The builder assembles the package in a fixed order: find the weekly pay, find the notice weeks, price each component, then add them.
Two details repay attention. The statutory scale counts full years: seven and a half years of service is seven weeks of statutory notice, not eight, because the scale in section 86 of the Employment Rights Act 1996 rises per completed year. And the comparison between statutory and contractual notice happens before worked weeks are subtracted, because the entitlement is to the longer period; what you worked then discharges part of that entitlement, as GOV.UK guidance on redundancy notice periods sets out in plain terms.
Worked examples: the quick price and the full build
Both modes are pre-filled with these cases, and the tables reproduce the tool output line for line.
| Quick mode | Value |
|---|---|
| Weekly pay | £900.00 |
| Notice weeks | 4 |
| Total compensatory notice pay | £3,600.00 |
| PILON builder line | Value |
|---|---|
| Weekly pay (derived from £52,000.00 annual) | £997.31 |
| Statutory notice (5 years of service) | 5 weeks |
| Notice weeks paid (contractual 4, statutory 5 wins, 0 worked) | 5 weeks |
| PILON (pay x weeks) | £4,986.57 |
| Benefits (£50.00 x 5 wks) | £250.00 |
| Holiday pay (3 days at £199.46 per day) | £598.39 |
| Total PILON package | £5,834.96 |
The contractual figure losing to the statutory one is the instructive part of this example. A contract promising four weeks sounds like the governing number until five years of service quietly raises the legal floor to five. Employers pricing an exit on the contract alone would underpay notice by a full week here, £997.31, before benefits and holiday are even considered. Run your own service length through the builder before accepting any figure built the other way.
UK statutory notice periods at a glance
The employer minimums below are the scale the builder applies, from the Employment Rights Act 1996. Your contract can promise more; it can never lawfully promise less.
| Continuous service | Minimum employer notice |
|---|---|
| Under 1 month | No statutory minimum |
| 1 month to under 2 years | 1 week |
| 2 years | 2 weeks |
| 5 years | 5 weeks |
| 9 years | 9 weeks |
| 12 years or more | 12 weeks, the cap |
Notice the asymmetry in the Act: an employee resigning owes a statutory minimum of just one week after the first month, however long they have served, though most contracts raise that considerably. Employer notice is the scale that grows with service, and it is the one that prices PILON in dismissals and redundancies. Notice pay itself is based on normal pay; GOV.UK's redundancy rights guide explains that where pay varies, it is averaged over the 12 weeks before notice starts. When you audit a final payslip, notice pay is also only one line among several: check any unpaid overtime and other accrued income owed for the period before you sign anything off.
Tax treatment: why the gross total is not the amount you keep
Since 6 April 2018, the post-employment notice pay (PENP) rules have treated the notice element of a termination package as earnings, in full, whether or not the contract contains a PILON clause. Income tax and both employee and employer National Insurance apply to it through payroll, exactly as if the notice had been worked. Two consequences follow. First, the £30,000 tax-free threshold that shelters genuine redundancy and ex gratia payments does not shelter notice pay: the notice slice is carved out and taxed first. Second, two packages with identical headline totals can net very differently depending on how much of each is notice pay versus redundancy pay.
This calculator therefore stops at gross, deliberately and visibly. A net figure would need your tax code, your other income in the tax year, and your National Insurance band, and a tool that guesses those quietly is worse than one that prices the gross package precisely and says so. Take the itemised gross breakdown to payroll or an adviser and have the deductions applied to real figures.
Worked notice, garden leave, or PILON: three ways to end the same weeks
Work the notice
- You stay employed, paid normally, benefits continue
- Handover happens properly; references and morale protected
- Slowest exit, and awkward where trust has broken down
Garden leave
- You stay employed and paid, but stay away from the workplace
- Contract still binds you: no starting the rival job early
- Employer keeps confidentiality protection for the full period
PILON (this calculator)
- Employment ends at once; unworked notice is paid as a sum
- Clean break: you can usually start elsewhere immediately
- Taxed as earnings in full; benefits stop unless the deal prices them in, as the builder does
The three routes cover the same weeks at roughly the same gross pay, which is why the choice is rarely about the headline number. It turns on timing, on restrictive covenants, and on whether benefits continue or get cashed out. If you are offered PILON, the benefits line in the builder is your checklist: price every benefit that stops, week by week, before you agree the package is equivalent.
What competing tools miss
The UK PILON tools reviewed for this page are competent on the core formula, and the strongest of them add a tax estimate this tool does not attempt. The gaps sit around the edges of the calculation.
Miss 1: no quick mode. Most builders force the full interview of salary, service, and contract before returning anything. When entitlement is already agreed and you only need the price, weekly pay times weeks is the whole job, and it is a separate mode here.
Miss 2: worked weeks handled as an afterthought. Part-worked notice is common in real exits and easy to overpay. The subtraction is built into the builder's sequence here, with the statutory-versus-contractual comparison made first, in the right order.
Miss 3: holiday pay at the wrong rate. Accrued holiday must be priced at the daily rate implied by the same weekly pay as the notice itself. The builder derives both from one weekly figure, so the two lines can never drift onto different pay bases.
Frequently Asked Questions
Earnings owed for the notice period when notice is not worked; called payment in lieu of notice (PILON) in the UK.
Weekly pay x notice weeks. Weekly pay = annual / 52.14, monthly x 12 / 52.14, or daily x working days.
One week for 1 month to 2 years of service, then one week per full year, capped at 12 weeks.
Yes, in full. Post-employment notice pay is treated as earnings for income tax and National Insurance.
Accrued untaken holiday is paid on top at the daily rate: weekly pay / working days.
Only the unworked balance is paid; the builder subtracts weeks already worked.
Yes. The tool formats every amount with a pound sign (£), matching the UK PILON cases it is built for. The figures cover weekly pay, notice weeks, benefits and holiday pay, all in sterling.
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References
- GOV.UK, "Redundancy: your rights - Notice periods" - statutory notice bands and payment in lieu of notice explained for employees. GOV.UK: Redundancy Notice Periods. Accessed October 2026.
- GOV.UK, "Redundancy: your rights" - notice pay basis, termination payments, and the tax treatment of each element. GOV.UK: Redundancy, Your Rights. Accessed October 2026.
- Legislation.gov.uk, "Employment Rights Act 1996" - section 86 sets the statutory minimum notice scale the builder applies. Legislation.gov.uk: Employment Rights Act 1996. Accessed October 2026.
- PeopleHR, "Payment in Lieu of Notice (PILON): Employer Guide" - the five-step PILON process, contractual extras, and PAYE treatment. PeopleHR: Payment in Lieu of Notice Guide. Accessed October 2026.
- Monaco Solicitors, "Payment in Lieu of Notice (PILON)" - employee-side explanation of statutory entitlement and how PILON differs from garden leave. Monaco Solicitors: Payment in Lieu of Notice. Accessed October 2026.