Unless there is an express contractual term providing for payment of wages or an agreed sum in lieu of notice, an employee is not entitled to wages in lieu of notice; the remedy is damages for breach of contract for failure to give requisite notice.

Where payment in lieu of notice is made the dismissal usually takes effect immediately. Where the notice period is worked the dismissal usually takes effect at the expiry of the notice period. This is because the date of effect of the dismissal is the date the employment relationship comes to an end.

Payments made in lieu of notice are compensatory in character—not wages earned or work performed—and must be credited against the employer's total liability for damages, including any severance payment made at termination.

Principles applicable to interpretation of payment in lieu of notice provisions.

Payment in lieu of notice does not affect whether the minimum employment period has been completed for the purposes of establishing jurisdiction to hear an unfair dismissal claim.

Where an employee is paid in lieu of notice pursuant to s.117(2)(b) of the Fair Work Act, the employer must pay the employee everything the employee would have received had they remained working during the notice period. Payment in lieu cannot assume unpaid leave during the notice period and therefore cannot reduce the amount owed.

Payment in lieu of notice under s.117(2) must be calculated on the basis of 'full rate of pay' which by virtue of s.18 includes incentive-based payments and bonuses. However, the full rate of pay is expressed in terms of the rate applicable to hours the employee would have worked had employment continued until end of minimum notice period.

Payment in lieu of notice does not change the date notice of dismissal was given for the purposes of calculating the minimum employment period.

Where an employment relationship ends by mutual agreement with payment in lieu of notice, the dismissal takes effect on the date the employment relationship ends (the date of agreed separation), not at the expiry of the notice period.

Whether a payment in lieu of notice immediately terminates employment is a question of fact, turning on subtle indications or nuances of wording in the termination letter, interpreted in context.

A dismissal effected through payment in lieu of notice occurs when an employer, having apprised itself of an employee's true intentions through explicit clarification from that employee, refuses to assign duties and ignores the employee's presence in the workplace, thereby demonstrating the employment contract has been terminated at the employer's initiative.

The contractor is not required to be placed in a position where they can replace the business with identical or closely similar arrangements; rather, they must be afforded a reasonable opportunity to find work broadly similar to that which they had been doing previously.