An employer’s motivation for making a PILON payment was not the employee’s disability but the discharge of the employer’s contractual obligation to provide the employee with notice of termination, so the payment was not exempted from the termination payments regime.  

The appellant was diagnosed with cancer, which resulted in him being unable to perform his employment duties. In July 2022, his employers (T) moved to end his employment, and offered a settlement agreement, which included a payment in lieu of notice (PILON).The appellant entered into the settlement agreement and his employment was terminated in September 2022. A PILON of £15,000 was paid, which was subject to PAYE deductions. The appellant disputed that the payment was