Payment in lieu of notice - holidays included?

[DanL]

Hi all,

the redundancy programme at work continues apace, which is fine. I've got a query about payment in lieu of notice. With a three month notice period, this can be quite a bit of cash, which is nice. The company position is that you'd get paid salary + car allowance for the period you would have worked, which is also fine and dandy.

We've asked the following question:

Employees asked said:

Does the payment in lieu of notice include a payment for holidays accrued during the 3 month notice period? (From the government’s website: "If a worker's employment is terminated, they have the right to be paid for leave accrued during the time of employment, no matter how short a period of employment. In such cases, holiday entitlement is based on the date they would have left if they had worked the full notice period, unless the worker agrees otherwise.")

To which they responded:

Company statement said:

PILON is a contractual payment and the contract states:
The Company may at any time in its absolute discretion elect to terminate your employment forthwith by paying to you, in lieu of the notice period referred to in clause 14.1, an amount equal to your basic salary and vehicle allowance (at the rates then payable under this Agreement) for such a period or part period excluding any bonus or benefits in kind. Such a payment shall be subject to such deductions for tax and national insurance contributions as are required by law and to any other authorised deductions.

Is this right? Surely payment it lieu is where the company would like to get rid of someone now, but pays out so that they're no worse off than if they'd worked their notice. Missing out on six days worth of leave (which is roughly 25 days pro rata over three months) would certainly leave someone worse off, hence the query.

Any legal/HR types care to give an opinion?

Edited by DanL on Thursday 24th February 10:20

[Amateurish]

The company is right. PILON is a contractual payment. After termination you will no longer be employed therefore holidays will not accrue.

[Soovy]

Correct

[DanL]

Rats. Ah well, thanks for the answer - it helps to know which things are worth fighting, and which are a waste of time, even if the answer isn't what I'd hoped!

Edited by DanL on Thursday 24th February 12:11

[fergywales]

Three months PILON, and you quibble over 6 days holiday?!

[DanL]

fergywales said:

Three months PILON, and you quibble over 6 days holiday?!

It's another grand and a bit, so why not "quibble"? If it was £100 I wouldn't care.

As for the PILON, my contract has a three month notice period. I'd expect to work that, or be paid for it - cuts both ways too, as it makes it harder to resign and leave for somewhere else unless I try to negotiate my way out of it.

Edited by DanL on Thursday 24th February 15:08

[Cyberprog]

Yes, but you would have accrued that holiday while working your notice...

[DanL]

Cyberprog said:

Yes, but you would have accrued that holiday while working your notice...

Indeed - the reason I asked about this is I wanted to find out if we were "due" the benefits we would have obtained if they'd allowed us to work our notice, rather than ejecting us post haste.

Don't get me wrong - I don't feel hard done by and I recognise that the PILON payment is generous. Part of the reason I took this job in 2008 is that we were heading into a recession and I knew I'd get a decent pay out if they made me redundant, even without working there for years. However, as we're not yet out of recession (or at least it doesn't feel as though we are!) I'm keen to maximise the amount of cash I leave with. This seems prudent given that I don't know how long it might take me to find another job.