If the employer terminates the employee or when the employee resigns without giving notice, the party that breached the terms of employment will have to pay salary-in-lieu of notice (or notice pay).
By definition, termination without notice means breaking the terms of the employment agreement, failure to pay salary and absence without cause.
For example, an employee is considered in breach of contract if:
the employee is absent from work continuously for more than 2 working days without approval and a good excuse.
the employee is absent from work continuously for more than 2 working days without informing and attempting to inform his/her employer of the reason.
How to process Salary-in-Lieu in Payroll?
If the employer is the party who terminated the employee's employment agreement without notice, here's how you can process salary-in-lieu in payroll:
1. Under Payroll Settings > Process Payment - Step 3 (Select Pay Item) > Ad Hoc Payment/Deduction tab, you can choose "Salary in lieu" pay item and key in the amount.
2. Do ensure that you enter a description in the Remarks field so it will be displayed clearly in the employee's payslip.