Notice Period Pay Calculator, 2026/27

How this is calculated

This calculator first works out the notice period owed, taking the higher of the statutory minimum, one week for each complete year of service up to a maximum of 12 weeks, and any longer contractual notice period, since an employee is always entitled to whichever is greater.

It then converts annual salary into a weekly figure and multiplies by the notice weeks to get gross notice pay, before applying income tax and employee National Insurance to estimate the net payment, on the basis that all pay in lieu of notice is taxed and NIC'd as normal earnings under the rules that have applied since April 2018.

This differs from other termination payments, such as a genuine ex-gratia redundancy payment, part of which can be paid tax-free up to £30,000; notice pay itself, whether worked or paid in lieu, does not benefit from that exemption and is always fully taxable.

Statutory versus contractual notice

Statutory notice is a legal minimum: one week's notice after one month's service, rising by one week for each complete year of continuous service, capped at 12 weeks after 12 years. Many employment contracts specify longer notice periods, especially for senior roles, and the longer of the two always applies.

Getting the correct notice period matters not just for the final payslip but for calculating continuity of employment and, where relevant, entitlement to statutory redundancy pay, which uses a similar length-of-service calculation.

Tax treatment of pay in lieu of notice

Since April 2018, all PILON payments are treated as earnings for both tax and National Insurance purposes, calculated using a statutory formula based on basic pay, regardless of whether the employment contract contains a specific clause allowing PILON. This closed a previous planning opportunity where some PILON payments could be treated as tax-free.

Employers should keep the notice pay calculation clearly separated from any genuine redundancy payment or ex-gratia sum on the termination statement, since only the latter can potentially benefit from the £30,000 tax-free termination payment exemption.

How much statutory notice is an employee entitled to?

One week after one month's service, rising by one week for each complete year of continuous service, up to a maximum of 12 weeks after 12 years' service, or the contractual notice period if longer.

Is pay in lieu of notice taxed differently from normal salary?

No. Since April 2018, all pay in lieu of notice is taxed and subject to National Insurance as normal earnings, regardless of whether the contract contains a PILON clause.

Can notice pay be included in the £30,000 tax-free termination allowance?

No, notice pay is always fully taxable. Only a genuine additional termination payment, such as an ex-gratia redundancy sum, may qualify for the separate £30,000 exemption.

What if the employee is not required to work their notice?

They are still entitled to be paid for the full notice period, either through pay in lieu (PILON) or by remaining on the payroll on garden leave for the notice period, both of which are treated as earnings for tax and NIC.