1. Introduction
Notice pay is a frequent subject of Payment of Wages complaints. Where an employee is dismissed without proper notice, or where pay in lieu of notice is not paid in full, the employee may bring a complaint under Section 5 of the 1991 Act in addition to any complaint under the Minimum Notice and Terms of Employment Act 1973.
This article considers the relationship between the two statutes, the calculation of notice pay, and the special rules that apply where the contractual notice period exceeds the statutory minimum.
2. Legislation and Case Law
Section 1 of the Payment of Wages Act 1991 includes within the definition of “wages” any sums payable by the employer in lieu of notice of termination. Notice pay therefore falls squarely within the scope of Section 5.
The Minimum Notice and Terms of Employment Act 1973 sets out statutory minimum notice periods based on length of service, ranging from one week for one to two years’ service to eight weeks for fifteen or more years’ service.
Where the contract provides for a longer notice period than the statutory minimum, the contractual entitlement prevails. In Kirby v Hudson [2024] IESC 27, the Supreme Court emphasised that the contractual notice provision is a matter of express agreement and must be honoured.
Where notice is not given, the calculation of pay in lieu of notice should include all components of normal remuneration including commission and benefits in kind, in line with the principles set out in British Airways plc v Williams C-155/10.
3. Decision
The WRC will identify the applicable notice period (contractual or statutory, whichever is greater) and calculate the value of notice pay by reference to normal remuneration. Where the employer has paid only basic salary during a notice period, the WRC may find an unlawful deduction.
Where the employer has failed to give notice at all, the WRC will award the value of the notice period in question. Compensation under the 1991 Act covers the actual loss, while compensation under the 1973 Act is calculated under separate principles.
Complainants may pursue both statutory routes in parallel, but should be careful to avoid double recovery. The WRC will typically structure the award to address the actual loss without duplication.
4. Takeaway
Employers terminating employment should calculate pay in lieu of notice with care, including all components of normal remuneration. Spreadsheet calculations limited to basic salary may give rise to Section 5 complaints.
Employees should review their final payslip and termination documentation against the contractual notice provision and the statutory minimum. Where there is a shortfall, prompt action within the six-month cognisable period is essential.
5. Further information
This article was prepared for informational purposes only. For further advice, please email enquiries@crushell.ie or contact the offices of Crushell & Co Solicitors.
6. About Crushell & Co
Crushell & Co is a specialist law firm focused on protecting and advancing the rights of employees in Ireland. We offer a nationwide service, advising individuals on a wide range of legal and regulatory issues arising at work, including employment law, employment immigration and workplace accidents and injuries.
We help employees understand their position and options by translating complex legal issues into clear, practical advice. Our approach is tailored to each client, ensuring that our strategy is aligned with their personal and professional circumstances.
Connect: @CrushellLaw or www.wordpress-576593-6594403.cloudwaysapps.com
