Employment contracts can include a term that allows an employer to make payment in lieu of giving notice. This means that the employer can pay to the employee an amount equal to what they would have earned had they worked during their notice period and bring the contract to an immediate end.

For employees covered by the Fair Work Act 2009, payment in lieu of notice must be calculated at the employee’s full rate of pay, including allowances, penalty rates, bonuses and superannuation contributions.