Notice Periods and PILON in the UK vs Italian Notice and Indennità Sostitutiva

Notice works on similar ideas in the UK and Italy, but the source of the numbers and the mechanics of payment in lieu are different. A UK employer used to a contractual PILON clause and a short statutory minimum will find that, in Italy, the CCNL does most of the work.

UK: statutory floor plus contract  

Section 86 of the Employment Rights Act 1996 sets the minimum notice an employer must give: one week after one month’s service, then one week per complete year from two years, up to twelve weeks. Employees must give at least one week after one month’s service. Contracts usually provide more, and the longer contractual period applies. See gov.uk on notice periods and Acas .

UK employers commonly use:

• PILON: a contractual right to end employment immediately and pay salary (and sometimes benefits) for the notice period. Without a clause, paying in lieu can be a technical breach.
• Garden leave: keeping the employee employed but away from work during notice, if the contract allows it.

Italy: notice from the CCNL  

Article 2118 of the civil code says that either party may end an open-ended contract by giving notice “in the time and manner” set by collective agreements, custom or equity. In practice the CCNL sets notice periods by job level and length of service, and separately for employer dismissal and for resignation. Senior staff and managers (quadri and dirigenti) typically have notice measured in months rather than weeks. The figure can differ significantly between sectors, so always check the specific CCNL table.

There is no UK-style statutory ladder. There is also no notice when the dismissal is for just cause (article 2119), or during a valid probation period.

Indennità sostitutiva: pay in lieu by law  

The Italian equivalent of PILON is written into the law itself. Article 2118 says that if notice is not given, the party ending the contract owes the other an indemnity equal to the pay that would have been earned during the notice period. That means:

• the employer can end employment immediately and pay the indennità sostitutiva del preavviso, without needing a contractual clause;
• an employee who resigns without working notice can have the equivalent amount deducted from final pay;
• the indemnity is taxed and subject to contributions like salary, and the period it covers is generally counted for TFR purposes as set by law and collective agreements.

Garden leave as a UK concept is less common. An employer can release the employee from work during notice, but the employee stays employed, keeps accruing rights and the non-compete only starts later.

Notice and illness or holiday  

During notice, sickness generally suspends the notice period within the CCNL protection limits. Holiday should not normally be imposed during notice to shorten it. Unused holiday is paid out at the end. Plan exits with this in mind; a long sick leave can delay the end date.

Resignation must be online  

In the UK, a resignation letter or email is enough. In Italy, since 2016, an employee’s resignation (and mutual termination) must be filed through the Ministry of Labour’s online procedure, under article 26 of Legislative Decree 151/2015. A simple email does not end the contract. Exceptions apply, for example for agreements signed in protected settings. HR teams should not accept a “resignation email” as final.

Dismissal must be in writing  

Article 2 of Law 604/1966 requires every dismissal to be written and to state the reason. An oral dismissal is ineffective. Notice runs from when the employee receives the letter, so delivery method matters (registered post, PEC certified email or hand delivery with signature).

Side by side  

Final pay on exit  

When employment ends in Italy, final pay includes salary to date, accrued 13th (and 14th) month, unused holiday and leave hours, any indennità sostitutiva and TFR. In the UK, accrued holiday and notice pay are standard, but there is no TFR. See our redundancy and TFR guide .

Fixed-term contracts and notice  

In the UK, a fixed-term contract can usually include a notice clause allowing early termination. In Italy a fixed-term contract normally ends on its expiry date without notice, and early termination by the employer before the end date is allowed only for just cause. Ending it early without a lawful reason can expose the employer to paying the salary that would have been earned until the end of the term. If you are unsure how long you will need someone, a permanent contract with a probation period is usually more flexible than a fixed term.

Common mistakes UK employers make  

• Copying a UK PILON clause into an Italian contract. It is not needed and may confuse what is owed.
• Treating an email as a resignation. Without the online filing, the employee is still employed.
• Forgetting notice in exit budgets. Unless there is just cause, notice is owed either as time or as money.
• Starting a non-compete too early. The Italian restriction begins when the employment ends, after any notice period.
• Calculating notice in UK weeks. Many CCNLs express notice in calendar days or months by level and seniority bands.

What this means if you hire through an EOR  

The EOR applies the CCNL notice table, sends the dismissal letter or processes the online resignation, and calculates the final payslip. On your side, plan exits with the notice period in your budget and timeline, decide early whether you want the person working the notice or paid in lieu, and remember that the notice cost is predictable from day one. The calculator shows monthly cost, which is the basis for estimating the indemnity.

The bottom line  

In Italy notice is set by the CCNL, pay in lieu is a statutory right, and both dismissals and resignations follow formal rules. Build the notice cost into every exit plan and let the employer handle the paperwork.

Related guides for UK companies  

• Unfair dismissal vs Italian dismissal rules
• Restrictive covenants vs Italian non-compete
• Italy vs UK overview
• Italian employment contracts

General information, not legal advice. Questions about a specific exit? Contact us .