Section 402D | “Post-employment notice pay” ^F1

(1)“The post-employment notice pay” in respect of a termination is (subject to subsection (11)) given by—^F1

(2)If the amount given by the formula in subsection (1) is a negative amount, the post-employment notice pay is nil.^F1

(3)Subject to subsections (5) , (6) and (6A)—^F1F2

BP is the employee's basic pay (see subsection (7)) from the employment in respect of the last pay period of the employee to end before the trigger date,

P is the number of days in that pay period, and

D is the number of days in the post-employment notice period.

(4)See section 402E for the meaning of “trigger date” and “post-employment notice period”.^F1

(5)If there is no pay period of the employee which ends before the trigger date then—^F1

BP is the employee's basic pay from the employment in respect of the period starting with the first day of the employment and ending with the trigger date,

P is the number of days in that period, and

D is the number of days in the post-employment notice period.

(6)If the last pay period of the employee to end before the trigger date is a month, the employee's basic pay is paid in equal monthly instalments, the minimum notice (see section 402E) is given by contractual terms and is expressed to be a whole number of months, and the post-employment notice period is equal in length to the minimum notice or is otherwise a whole number of months, then—^F1F3

BP is the employee's basic pay from the employment in respect of the last pay period of the employee to end before the trigger date,

P is 1, and

D is the length of the post-employment notice period expressed in months.

(6A)In any other case where the last pay period of the employee to end before the trigger date is a month and the employee's basic pay is paid in equal monthly instalments, then—^F1F4

BP is the employee's basic pay from the employment in respect of the last pay period of the employee to end before the trigger date,

P is 30.42, and

D is the number of days in the post-employment notice period.

(7)In this section “basic pay” means—^F1

(a)employment income of the employee from the employment but disregarding—^F1

(i)any amount received by way of overtime, bonus, commission, gratuity or allowance,^F1

(ii)any amount received in connection with the termination of the employment,^F1

(iii)any amount treated as earnings under Chapters 2 to 10 of Part 3 (the benefits code) or which would be so treated apart from section 64,^F1

(iv)any amount which is treated as earnings under Chapter 12 of Part 3 (amounts treated as earnings),^F1

(v)any amount which counts as employment income by virtue of Part 7 (income relating to securities and securities options), and^F1

(vi)any employment-related securities that constitute earnings under Chapter 1 of Part 3 (earnings), and^F1

(b)any amount which the employee has given up the right to receive but which would have fallen within paragraph (a) had the employee not done so.^F1

(8)In subsection (7) “employment-related securities” has the same meaning as it has in Chapter 1 of Part 7 (see section 421B).^F1

(9)The Treasury may by regulations amend this section for the purpose of altering the meaning of “basic pay”.^F1

(10)A statutory instrument containing regulations under subsection (9) may not be made unless a draft of it has been laid before, and approved by a resolution of, the House of Commons.^F1

(11)Where the purpose, or one of the purposes, of any arrangements is the avoidance of tax by causing the post-employment notice pay calculated under subsection (1) to be less than it would otherwise be, the post-employment notice pay is to be treated as the amount which the post-employment notice pay would have been but for the arrangements.^F1

(12)In subsection (11) “arrangements” includes any scheme, arrangement or understanding of any kind, whether or not legally enforceable, involving a single transaction or two or more transactions.^F1