When is a notice indemnity paid instead of notice?
Whenever a contract is ended without a notice, or with a notice that is too short, and without serious misconduct. The party that ends it pays the other an indemnity, and the contract stops immediately, as the SPF Employment explains. No formality is required, although a written record is wise.
Most often it is the employer: it dismisses you and pays the indemnity instead of letting you work your notice period. It also happens halfway, when a notice is being worked and the employer decides to end the contract early: the indemnity then covers the weeks left. And it applies to you if you leave without working the notice you owe.
How is a notice indemnity calculated?
On your current pay plus the benefits you are entitled to under your contract, a collective agreement or established practice, for the length of the notice. Variable pay is averaged over the previous 12 months. Benefits that are only a favour, or costs the employer bears anyway, are not included.
Since notice periods are in weeks, a monthly salary is converted by multiplying it by 3 and dividing by 13. Example: with €4,000 gross a month and a 21-week notice, the base is €923.08 a week, so €19,384.62 gross for the salary alone. Contractual benefits are then added on top.
Is there a cap on the notice indemnity?
Only for recent contracts. For contracts whose work started from 1 June 2026, the employer’s notice, and therefore the indemnity, cannot exceed 52 weeks, as Securex explains. For contracts that started earlier, there is no cap: the indemnity follows the full table in how to calculate your notice period.
A second rule reduces it. If your notice is 30 weeks or more, your employer must offer you outplacement, and 4 weeks of pay are deducted from the indemnity to fund it, whether you accept the offer or refuse it, as UCM summarises.
Notice or indemnity: which is better for you?
Financially, an indemnity is paid at once and leaves you free to start a new job the next day. A worked notice keeps you paid month by month, with paid time off to look for work, and holidays or sickness during the notice extend it.
For most IT and engineering profiles who find work quickly, an indemnity is the more comfortable outcome. Whatever happens, check that the base includes your benefits and that your exit holiday pay and end-of-year bonus are paid on top. Then look at the IT and engineering roles currently open.
