Payment in lieu of notice (indemnité compensatrice de préavis) is due when the employer releases the employee from working their notice period: the employee must lose none of the salary and benefits they would have received up to its end (article L1234-5 of the Labour Code). It is calculated by multiplying the length of the notice period, set by length of service or by the collective agreement, by the reference salary.
The notice period is the period that precedes the actual termination of the contract. It runs from the date on which the registered letter notifying the dismissal is presented (article L1234-3). During this period, the contract continues as normal: the employee works and receives their salary. The notice period applies to dismissal on personal grounds as well as to economic dismissal, save for gross misconduct (faute grave) or serious misconduct with intent to harm (faute lourde), and subject to the special cases detailed below.
Two situations must be distinguished. If the employee works their notice period, they are paid as usual: there is no specific payment. If the employer releases them from working it, the employer owes them a payment in lieu of notice. It is this second case that calls for a calculation.
Article L1234-1 of the Labour Code sets a minimum length according to the employee's length of service in the company, where the dismissal is not grounded in gross misconduct:
| Continuous length of service | Statutory notice period |
|---|---|
| Less than 6 months | Set by law, the collective agreement or custom |
| From 6 months to less than 2 years | 1 month |
| 2 years or more | 2 months |
These lengths are minimums. The collective agreement, the employment contract or custom may provide for a longer notice period or a length-of-service condition more favourable to the employee: the most advantageous provision then applies. The applicable agreement must therefore be checked before calculating.
For a disabled worker covered by the employment obligation, the statutory length is doubled, up to a maximum of three months (article L5213-9). This rule does not apply where the collective agreement or custom already provides for a notice period of at least three months.
Where the employer releases the employee from working their notice period, article L1234-5 provides that this non-performance entails no reduction in the salary and benefits the employee would have received had they worked until the end of the notice period, including the paid-leave allowance.
The base is therefore the full remuneration, not just the base salary:
In practice, this rule translates into two lines: the payment itself, and the related paid leave, calculated using the one-tenth rule (article L3141-24). Article L1234-5 also specifies that payment in lieu of notice is cumulative with the statutory severance pay (indemnité de licenciement). Finally, it comes on top of the payment for leave accrued and not taken.
Take an employee paid 2,400 euros gross a month, usual bonuses included, with 3 years of service, released by the employer from working their notice period.
| Step | Calculation | Result |
|---|---|---|
| Length of notice (2 years or more) | 2 months | 2 months |
| Payment in lieu of notice | 2 × 2,400 euros | 4,800 euros |
| Related paid leave | 4,800 euros × 10% | 480 euros |
The employee receives 4,800 euros for the notice period not worked, plus 480 euros of related paid leave. If the collective agreement provided for a 3-month notice period, the payment would be recalculated on that length.
Payment in lieu of notice is not due in several cases:
Recharacterising gross misconduct as a real and serious cause therefore restores the entitlement to the notice period.
Payment in lieu of notice is only one line among those that add up on termination. Depending on the situation, it is combined with the severance pay, the payment for accrued paid leave, any salary arrears such as unpaid overtime, and, if the dismissal is successfully challenged, the award for dismissal without real and serious cause. In a negotiated termination, these amounts also weigh on the rupture conventionnelle (a statutory mutually-agreed termination), which involves no notice period: see what each route is worth for the employee.
To assess the whole picture objectively, Plato calculates the sums due and models the termination scenarios from the exhibits in the file, with each amount staying traceable back to its source: this is the purpose of its employment law specialisation. The final check remains the lawyer's.
When is payment in lieu of notice due?
It is due when the employer releases the employee from working their notice period. The employee must then lose nothing of what they would have received by working until the end (article L1234-5). If they work their notice period, they are simply paid as normal. If they request the release themselves and the employer accepts, the payment is not due.
What is the statutory notice period in a dismissal?
Under article L1234-1: one month for length of service from 6 months to less than 2 years, two months from 2 years. Below 6 months, the length depends on the law, the agreement or custom. The collective agreement may provide for a longer period, which then prevails, and the statutory length is doubled for a disabled worker, up to a maximum of three months.
How is the amount of the payment calculated?
The length of the notice period is multiplied by the reference salary, reconstructed with the usual bonuses and benefits. The related paid leave is added, calculated using the one-tenth rule, and the payment is cumulative with the severance pay.
Does gross misconduct deprive the employee of notice?
Yes. Gross misconduct, like serious misconduct with intent to harm, deprives the employee of the notice period and therefore of the payment in lieu of notice. This is one of the financial effects of how the misconduct is characterised.
Is the notice payment added to the severance pay?
Yes, article L1234-5 expressly provides for it. They are two distinct sums that add up, alongside the payment for accrued paid leave and, where applicable, salary arrears and the award for dismissal without real and serious cause.
Can a tool estimate the sums due on termination?
Yes. Plato calculates the indemnities due and models the termination scenarios from the exhibits in the file, with each figure staying traceable back to its source. Final verification and decision remain the lawyer's.