PILON Calculator (Pay In Lieu of Notice)
Estimate your PILON amount based on salary, notice period, holiday, and optional benefits loading.
What is PILON?
PILON means Pay In Lieu Of Notice. Instead of asking an employee to work through their notice period, the employer ends employment immediately and pays compensation for that notice period.
A PILON payment is common when a business wants a clean break, needs to protect sensitive information, or is restructuring teams quickly. In practical terms, PILON tries to put the employee in the financial position they would have been in if they had worked their notice.
Why use a PILON calculator?
A notice payment can involve more than just salary. Depending on contract terms and local law, the final amount may include multiple components. A calculator helps you create a fast estimate before payroll finalizes the official figure.
- Quickly estimate gross notice pay
- Include unused holiday payout
- Add bonus or commission if applicable
- Model benefits or pension loading
- See an estimated net amount after deductions
How this PILON calculator works
1) Convert your pay into a weekly amount
The tool first converts your pay to weekly pay based on the frequency you choose (annual, monthly, weekly, daily, or hourly).
2) Convert notice period to weeks
Your notice can be entered in weeks, months, or working days. The calculator converts everything into equivalent weeks so the calculation is consistent.
3) Calculate base PILON
Base PILON = weekly pay × notice weeks.
4) Add other components
- Unused holiday pay: daily pay × unused holiday days
- Bonus/commission: entered directly
- Benefits loading: percentage of base PILON
5) Estimate net amount
If you enter a deduction percentage, the tool also gives an approximate net figure.
Example PILON calculation
Suppose an employee earns £52,000 per year, has a 6-week notice period, and 4 unused holiday days. They also expect £500 commission and a 5% benefits loading:
- Weekly pay = £52,000 ÷ 52 = £1,000
- Base PILON = £1,000 × 6 = £6,000
- Holiday pay (5-day week) = (£1,000 ÷ 5) × 4 = £800
- Benefits loading = 5% of £6,000 = £300
- Bonus/commission = £500
- Estimated gross PILON = £7,600
What is usually included in PILON?
The exact answer depends on your contract, payroll policy, and legal jurisdiction. Common items may include:
- Basic salary for the notice period
- Regular contractual allowances
- Accrued but unused holiday entitlement
- Certain commission or bonus elements (if contractually due)
- Employer benefits value (in some arrangements)
Important tax and legal notes
PILON is often taxable in many jurisdictions, including the UK under current payroll rules. That means income tax and social contributions may be deducted through payroll just like normal earnings.
This calculator provides an estimate for planning purposes only. It is not legal or tax advice. Final amounts should be confirmed by HR, payroll, or an employment lawyer—especially if your package includes share options, deferred bonus plans, garden leave clauses, or settlement terms.
Tips for employees and HR teams
For employees
- Review your employment contract and notice clause carefully
- Check whether commission and allowances are contractual
- Ask for a written breakdown of PILON components
For HR and managers
- Document each component used in the calculation
- Apply a consistent method for daily and weekly conversion
- Coordinate with payroll for compliant taxation and reporting