Can I pay employees who are leaving or do they have to work their notice?

If you want to have the option to pay employees for their notice period rather than have them work it, you should include a PILON (pay in lieu of notice) clause in the contract.

If you pay a departing employee in lieu of notice, their employment ends on the day they stop working for you, not at the end of the notice period.  So, for example, if an employee has a 4-week notice period and you decide to pay them in lieu of notice on the day they resign, the employment ends on that day and not in 4 weeks time.