Notice pay (pay in lieu of notice)

Notice pay is the amount owed by a party who terminates an open-ended employment contract without observing the statutory notice periods. It equals the gross wage, including regular benefits, for the notice period, which is scaled by the employee's length of service.

The notice obligation binds both sides: an employer dismissing without proper notice and an employee leaving without granting notice may each owe this compensation. The employer may also terminate immediately by paying the wages for the notice period in advance.

No notice pay arises where the contract is terminated immediately for just cause or where a fixed-term contract simply expires. During the notice period the employee is also legally entitled to paid time off, counted within working hours, to search for a new job.