Some workers who are dismissed from their jobs receive payments in lieu of notice. These are payments that are made by an employer that is higher than the typical wages an employee receives when terminating an employee instead of going through a formal termination process. These wages are a substitute for any wages the employer would otherwise pay an employee after he or she is terminated. Employers are not required to offer wages in lieu of notice. Typically, these are only available when they are included in an employment contract or collective bargaining agreement. If you have questions about wages in lieu of notice, the employment lawyers at Swartz Swidler can help.
Understanding payments in lieu of notice
When an employee is paid money that he or she would have earned through working during the contracted period because he or she is being terminated without notice, it is called wages in lieu of notice. A contractual period for notice may be included as a term in an implied or express contract. Express contracts can be oral or written.
In some cases, contracts may call for written notice or wages in lieu of notice. During the contractual period, the employee remains under contract and will not be allowed to take a different job. Employers use wages in lieu of notice when they want to end an employee’s services immediately instead of giving the worker the notice required by the contract. These payments are not given when employers fire employees for engaging in gross misconduct.
What is the significance of payments in lieu of notice?
Employers who give workers wages in lieu of notice can stop having them report for work but continue to keep the workers on their payroll while issuing them paychecks. This type of arrangement is considered to be payments in lieu of notice. The worker is technically unemployed since he or she is not being paid to perform work. However, a state can still deem the payments to be income.
Workers who receive remuneration in lieu of notice might still receive other benefits from their employers even though they have been terminated. Some examples might include receiving health benefits or vacation pay during the time that they are receiving wages in lieu of notice.
In New Jersey, wages in lieu of notice are considered to be wages. Workers who are receiving these types of payments are not eligible for unemployment compensation while they receive them. However, workers may be eligible for unemployment compensation if their payments in lieu of notice are for less than a week’s pay.
Remuneration in lieu of notice and the WARN Act
The WARN Act covers certain employers who conduct planned mass layoffs or plant closures and requires them to give advanced written notice to affected employees. Employers can opt to pay wages in lieu of notice to meet the federal law’s requirements. Under this law, employers must provide 60 days of written notice before conducting a mass layoff. If the employer decides to complete the mass layoffs sooner, the employer can make payments in lieu of notice to meet the law’s requirements.
Payments in lieu of notice and employment contracts
Some employment contracts include payment in lieu of notice provisions to provide the basis for immediately terminating a contracted employee. Employers use these types of provisions to avoid violating the contract. To be valid, the provision must state the terms regarding the payment in lieu of notice, including the amount that should be paid. Typically, a payment in lieu of notice provision will state that the contracted employment can be immediately terminated if the employer pays the worker a payment in lieu of notice for his or her base salary through the end of the notice period. Disputes can still arise when an employer pays wages in lieu of notice when a provision is not included in the employment contract. Disputes are especially likely to arise when there are share options in dispute or when the worker stands to lose additional benefits or pay because of a loss of coverage by the employer. Employment lawyers may help employees to negotiate with their employers to resolve these and other disputes that arise in situations involving wages in lieu of notice.
How are payments in lieu of notice calculated?
Employers who intend to offer payments in lieu of notice should make them as soon as they terminate the employment of the affected worker. They can calculate the payment according to the terms outlined in the employee’s contract. They can also issue them at their discretion. When the payments in lieu of notice are not included in the employment contract, they may constitute a breach of contract.
Get help from the experienced employment lawyers at Swartz Swidler
Workers who are offered payments in lieu of notice might want to seek help from the experienced lawyers at Swartz Swidler. If the worker has an employment contract, the attorneys can review it and advise the worker about the legality of the payment in lieu of notice. The attorneys might also negotiate with the worker’s employer to secure additional pay or benefits for the worker. In situations in which the employee’s termination was wrongful or in breach of the contract, the attorneys might litigate the matter through the court process to protect their client’s rights. Contact Swartz Swidler today to schedule a consultation by submitting your information to us on our online contact form or calling us at 856.685.7420.