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What are payroll liabilities?

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Notice pay is the compensation an employee receives during their contractual notice period after resigning or being terminated. It applies whether the employee works through the notice period or is released early with equivalent pay (often called payment in lieu of notice, or PILON).

What does notice pay include?

Notice pay typically includes:

  • Base salary
  • Allowances or commissions (if contractually agreed)
  • Benefits for the notice period (e.g., health insurance)
  • Accrued vacation or unused leave, depending on local law

Where does notice pay apply?

Notice pay is required in most countries:

  • UK: 1 week’s notice per year of service, up to 12 weeks
  • Germany: Legal minimums increase with tenure
  • U.S.: No statutory requirement (employment-at-will applies unless specified in contracts)

Who is responsible for providing notice pay?

The employer must follow the employment contract and local labor laws. In many jurisdictions, failing to pay notice correctly may result in wrongful dismissal claims or legal disputes.

Related Items

Accrued Payroll
Allowance
Balance Transfers
Bank Deposit

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