We reserve the right to pay base salary only in lieu of any period of notice

qwertz

Hi! I am looking for information or opinions on the following clause in my employment contract:

"We reserve the right to pay base salary only in lieu of any period of notice which we are required to give."

Does this mean that they can withhold annual leave, pension contributions, health insurance allowances and similar benefits?

28064212

Does this mean that they can withhold annual leave, pension contributions, health insurance allowances and similar benefits?

They can't contract out of legal requirements. If your position is terminated and they choose to pay you off instead of giving you notice, they still have to pay you for any annual leave accrued. Pension, health insurance etc. would probably not be covered.

However, I think there's a pretty big question mark over whether you can "pre-agree" to waive your notice period. The waiving of a notice period requires the consent of both parties. I'm not sure you can consent to waive a notice period that doesn't exist yet, or that you can't withdraw your consent at any time in the future. You should get proper legal advice if it's a substantial consideration for you

Jim2007

First of all you can't take sentences out of context and expect to get an accurate interoperation, they have to be read in the context of the document you are quoting.

That said, it is my understanding that that sentence refers to the calculation of gross salary to be used in lieu of notice. So the top line of your pay slip. How that impacts your rights to the other items you mentioned can't be inferred from the single sentence you stated.

kirving

Not a legal definition, as what you've quoted is vague and needs to be looked at in context of the entire contract, but I would take it to mean that you wont get say half your bonus if you're let go in June, and you won't get commission or overtime if they put you on gardening leave.

qwertz

Appreciate the replies!

This particular section is rather vague, for context: "Thereafter, your employment may be terminated by you or by us on giving to the other three months previous notice in writing. We reserve the right to pay base salary only in lieu of any period of notice which we are required to give."

chrisd2019

https://www.boards.ie/discussion/comment/122002948#Comment_122002948

Are you in a position with bonus or commision, if yes that would not be part of notice payment.

Ted222

You could reasonably ask your employer for clarification of what that means.

However, I would take it to mean that any additional salary (overtime, etc) which you would be ordinarily receive would not be payable in the notice period.

bucketybuck

https://www.boards.ie/discussion/comment/122001750#Comment_122001750

I didn't read it as them saying that they are waiving the notice period, just that during the notice period it would be base salary only. The notice period still exists.

Unless I am reading it wrong, but if they waived the requirement for the OP to give notice why would they be paying anything?

Jim2007

https://www.boards.ie/discussion/comment/122002948#Comment_122002948

It is not vague, it is well written and assuming it is a reasonably sized company, I'd expected that at least the original was drafted by a solicitor. So for me the paragraph itself is fine, but as already said, it entirely dependents on the context of the whole document. If this is important to you, then seek legal advice because we can't go any further on the basis of a few sentences.

Del2005

https://www.boards.ie/discussion/comment/122003549#Comment_122003549

I'm assuming the OPs job is somewhere they don't want to let you work when they give you notice. So instead of making the OP work for 3 months, where they could do untold damage, they'll pay them 3 months wages and get them off site ASAP. I'd say the meeting would have security with everything from your desk in a box outside and then they walk you off site after with a cheque in your pocket.

Happened a friend of mine. Went to work as normal one morning and was in a pub across the road having a pint at 10am with a nice payoff.

PmMeUrDogs

You can't sign away your rights to annual leave etc.

It reads as you'll be paid no bonuses or commission or any non-stat pay during any notice period.

I signed similar in my last job as I was salaried + monthly performance bonus. They decided to pay my bonus anyway after I left but didn't have to per my contract terms.

Peregrinus

On a strict reading, that clause only applies to a notice period which the employer is required to give. So if the employee gives three months' notice of resignation, that clause won't apply. It applies where the termination is initiated by the employer.

My take on this is that the employer's intention is to give itself the option, if you are being terminated, to pay you base salary only during the notice period. As others have pointed out, you can't contract out of your statutory entitlements so, regardless of what this clause said, you would still accrue annual leave at the statutory minimum rate during your notice period. But, at least arguably, they could refuse to pay employer pension contributions, etc.

My guess is that, in practice, they would only invoke this clause if they were putting you on gardening leave, so not requiring you to attend or work. I suspect its aimed at countering an argument that they can't put you on gardening leave, because that would deprive you of the possiblity of earning customary overtime, weekend rates, etc.

witchgirl26

I would think this is very straightforward. If either you or they give notice that you're fired or you're leaving, they can pay you the notice period instead of having you work it. Now some places may do this as a lump sum (i.e. 3 months pay in this case in one pay cheque) or put you on "garden leave" so pay you for sitting at home. It wouldn't affect annual leave entitlements which would have to be either taken or paid. It could affect pension & health insurance however depending on how they do it. They could reasonably cancel your health insurance as of your final date too so that is something to be aware of. And it would be just your base salary so no commissions etc would be paid during that time frame.

CramCycle

It is basically gardening leave, if you give notice and they don't want you to stay on site for whatever reason, they will give you 3 months pay and off you go. It doesn't mean they will or they won't, they may want you to stay working in which case you will get everything you normally get.

dennyk

Sounds like a standard 'pay in lieu of notice' (PILON) agreement. Such an agreement is legal provided that it doesn't result in you receiving less than the pay you'd normally receive under the applicable minimum statutory notice period. It is however different than 'garden leave' in that under a PILON agreement, your employment ends immediately, whereas with garden leave your employment would technically continue for the duration of the notice period even though you aren't actually working.

For the employee, the advantage to PILON is that you are no longer under the control of your now-former employer and you're free to start another job immediately, rather than having to wait out your notice period. The downside is that you won't be accruing any further annual leave, however, since your employment ends immediately (though if your contractual notice period is longer than a month, the flip side of that is that with PILON your employer can't require you to use accrued annual leave during your notice period, so it might work out better for you in the end anyway; if they put you on garden leave for three months then they could require you to use up to two months of annual leave and therefore wouldn't have to pay you for that annual leave in addition to your notice period pay, but if they PILON you then your employment is over straight away and they must pay you for all of your accrued unused annual leave in addition to your PILON payment).