Misconduct and Pay in Lieu of Notice

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Occasionally we are asked how to manage the immediate exit of an employee working out their notice.  Often this question is posed when action amounting to gross misconduct has been discovered after the notice has started running.  In Duncan Cavenagh v William Evans Limited the Court of Appeal has confirmed that once an employer has committed to relying on a contractual obligation to make a payment in lieu of notice (PILON) then they must do so, even if it later discovers gross misconduct on the employee’s part.  The misconduct is not a defence to not paying the remaining notice.

This would seem like a bad deal for employers.  The way to avoid the consequence of this case is to clearly state in the employment contract that the PILON clause ceases to be applicable if misconduct is discovered after the termination notice had been issued.

For more information, help or advice please contact Tim Davies on 0191 211 7927 or email [email protected].