Convert a notice period into a dollar figure. Enter the employee’s last drawn gross rate of pay (basic salary plus fixed allowances) and the notice period, and this tool calculates salary in lieu of notice using MOM’s standard formula.
What ‘in lieu of notice’ actually means
When either side doesn’t want to work out the full notice period, they can pay — or be paid — a sum equal to the salary the employee would have earned during that notice. That payment is what ‘in lieu of notice’ means, and it’s taxed and CPF-treated the same as ordinary wages.
The calculation itself is simple once the two inputs are right: gross rate of pay, and the length of notice being bought out. Getting the gross rate wrong — by including or excluding the wrong allowances — is the most common way this number ends up off.
Gross rate of pay means basic salary plus fixed allowances — it excludes overtime, bonuses, and reimbursements. If notice is in days, MOM’s formula uses a daily rate of 12 × monthly gross rate ÷ 365. Check the employment contract first: contractual notice, if longer than the Employment Act minimum, governs. See the Notice Period guide for statutory minimums by length of service.