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Final payments and related matters

Overview
Overview

This topic covers pay on termination of employment, including payment of outstanding wages and other monies due, deductions from pay, pay in lieu of notice and redundancy pay. The topic also considers some more general matters, such as the employer's obligation to provide written reasons for dismissal, exit interviewing, and the law concerning job references.

  • At the end of an employment, the employee must be paid all wages up to the date on which the contract ends, any accrued but untaken statutory holiday (plus any additional contractual holiday if the contract so permits) and any overtime, commission, etc already earned. 

  • Instead of working their notice period, an employee may be given pay in lieu of notice (PILON) and allowed to leave immediately. 

  • Employees who have two or more year of continuous service have the right to a written statement giving the reason for their dismissal if they request one. If such a request is made, the employer must provide such a written statement within 14 days.

  • There is no legal obligation except in limited circumstances (for example, in certain industries such as care, a reference is a legal requirement) for an employer to provide a reference for an employee who leaves to take up employment with another employer. 

  • Employees have no automatic right in law to have access to a written reference of which they are the subject.

  • Where a reference is given, the employer giving it has a duty of care towards both the new employer and to the ex-employee and must take reasonable care to ensure that the reference is fair and accurate. A breach of this duty of care will make the employer liable in negligence for any financial losses arising from a negligent misstatement in the reference.