Final pay when someone leaves a job

2. Holidays and final pay

Employers must pay workers 'in lieu' for any untaken statutory holiday entitlement they've accrued when they leave. This means the employer pays the worker holiday pay, instead of them taking the holiday.

If the person leaving took more holiday than they built up

Employers can deduct money from final wages if both of these apply:

• the person has taken more holiday than they built up
• it's agreed in the contract or in writing beforehand

Check if the contract includes more holiday  

Some employment contracts include more holiday entitlement than the statutory amount. This can be called 'enhanced' or 'contractual' annual leave. Check the contract for rules around pay for any additional amount.

3. Deductions for training courses

Employers might be able to deduct money from final wages for training courses. This can only happen if it was agreed in the contract or in writing beforehand.

For example, an employer could ask someone to pay back training costs if they leave within 6 months. The agreement must be in writing before the training course starts.

Deductions for mandatory training must not reduce pay below the National Minimum Wage.

When a deduction can take wages below the National Minimum Wage

A deduction for training courses can only legally take someone's pay below the National Minimum Wage if all of the following apply:

• they agreed in writing to pay back costs, for example in a letter or email
• the training was voluntary
• they either chose to leave or were dismissed because of their conduct

Contact the Acas helpline to discuss your options if:

• you're making someone redundant
• a deduction for training courses would take their pay below the National Minimum Wage

4. Pay during the notice period

Anyone with the legal status of employee must be paid as normal for any time they work during their notice period.

An employee might be off work during their notice period. In this case, how much they're paid will depend on the type of notice.

An employee could be entitled to get 'payment in lieu of notice' (PILON). This means they stop work straight away but still get paid for their notice period.

The employer might have written this into the employee's contract or agreed it with them verbally. If it's a verbal agreement, everyone should also keep a written record.

Checking the notice period

It's important to check the employment contract to confirm if the employee has either:

• 'statutory notice period' – this is the legal minimum notice period
• 'contractual notice period' – this is a longer notice period that is written in the contract

This might help when calculating the final pay for the employee's notice period.

If an employee is dismissed, made redundant or resigns

How much notice and notice pay an employee gets depends on if they are:

• dismissed for gross misconduct
• made redundant
• resigning because of constructive unfair dismissal – this means they think their employer has seriously breached their employment contract
• choosing to resign

The employee is not entitled to any notice period if they are dismissed for gross misconduct.

If an employee is dismissed for another reason, the employer can give them more notice than the statutory minimum. They cannot give them less.

If the employee resigns because of constructive unfair dismissal, they do not have to give notice to their employer.

If an employee resigns because they want to, they must give either:

• the legal minimum notice period
• the period written in their contract, if this is longer

Find out more about notice periods

Notice pay when the employee is working

If an employee has fixed working hours and a consistent rate of pay, they must get their full normal pay during their notice period.

If an employee's hours or pay change each week, notice pay can be harder to work out. Employers should get legal advice to make sure they pay the right amount.

Notice pay if the employee is off work

An employee's notice pay might be affected if they do not work during their notice period because they're:

• off sick
• on holiday
• off due to pregnancy or childbirth
• on statutory family-related leave (this includes maternity, paternity, adoption, shared parental, parental, parental bereavement, neonatal care or carer's leave)
• willing to work but asked not to by their employer (for example, because of lay-offs or short-time working)

The amount of notice pay they're entitled to depends on their contractual or statutory notice period and whether they're:

• being dismissed or made redundant
• resigning

If an employee has been dismissed or made redundant

An employee is entitled to their full normal pay if their contractual notice is:

• less than 1 week longer than statutory notice
• the same as statutory notice

An employee will not be entitled to their full normal pay if their contractual notice period is longer than statutory notice by one week or more. They are only entitled to the appropriate pay for the reason they're off.

An employee who's off work might have already been paid all their statutory entitlement. For example if:

• they've been off sick longer than the statutory allowance of 28 weeks
• they're now on the unpaid part of their maternity leave

This could mean they're not entitled to any pay during their notice period if their contractual notice period is longer than statutory by one week or more.

If an employee has resigned and they're off work during their notice period

When an employee resigns, they should check their contract to see what their notice period for dismissal would be. Even though they are resigning, their notice pay rights depend on whether their dismissal notice period is statutory or contractual.

If the dismissal notice period is less than a week longer than the statutory notice period

They're entitled to one week's full normal pay if they're off work during their notice period.

For any remaining weeks they're off work, they're only entitled to the type of pay for the reason they're off. For example, if they're off on maternity leave they would only be entitled to any maternity pay due to them.

If the dismissal notice period is at least 1 week longer than the statutory notice period

They're only entitled to be paid for the reason they're off during their notice period, for example statutory sick pay if they're off sick.

Contact the Acas helpline

If you have any questions about notice pay, you can contact the Acas helpline.

5. Leaving without working notice

The person leaving should try to reach agreement with their employer if they need to leave without working some or all of their notice.

If someone leaves without agreeing it with their employer first, they could be in 'breach of contract'. This means the person could have a court claim made against them if the employer ends up with extra costs.

If someone leaves early, the employer only has to pay them for the time that they've worked. This includes any money owed for accrued but untaken holiday.

If the employer ends up with extra costs

The employer can end up with extra costs if someone leaves before or during their notice without agreeing it.

For example, they have to spend more to hire someone else on a short-term contract.

In these situations the employer might be able to:

• make a deduction from any final wages, if the contract allows it
• make a court claim to get the money back from the person who left

Find out more about making a court claim on GOV.UK

6. If you do not agree with your pay

If you think your final pay is wrong, you should raise this with your employer. It's usually best to raise the problem informally first. Find out more about raising a problem at work.

If you've tried all options to resolve the issue, you might be able to make a claim to an employment tribunal.