Tribunal Action against ex-employer for non payment of dues

amitsharma_2

I have just initiated tribunal action against my old firm and was hoping for some advice with regards to where I stand.

My firm recently made some redundancies and invited people to take up voluntary redundancy (VR) or possibly face compulsory redundancy.

I took up the VR option but since I had only joined the firm a few months back, I had some genuine claims for unfair dismissal, mishandling and misrepresentation at the time of my employment etc which I used to agree a suitable VR package.

My package was agreed as a tax free amount including my VR pay and my remaining holiday pay.

Two months after leaving the firm and after numerous delays and very little response from my ex firm, they have paid me my VR pay tax free but have not paid my holiday pay at all. They went on to issue my P45 to me without the full payment being made.

When I questioned them, they said they would consider paying it but it would be taxable. I stated that the agreement was that the whole sum would be tax free at which point they stated that holiday pay is PAYE and hence, taxable.

Now I know that holiday pay is taxable but having agreed to pay it to me tax free and then now shifting the goalposts is unethical and hence, I have not accepted their offer. My decision not to pursue other action with this firm was based on the tax free lump sum amount agreed on which they are now changing their stance.

I spoke to ACAS and the Citizens advice bureau and also to legal counsel at my new firm and have now proceeded with tribunal action as guided by them but was wondering if anyone here had any views or advice.

Personally, I think that my ex-firm is facing financial difficulties and the word on the street is that they are likely to go bust within 6 months and that might possibly be the reason for them unethically shifting their stance but I am so upset by the fact that they kept me waiting for 2 months, have only paid part of what is due and are now haggling over a small amount. Not sure what there clients, employees, partners and investors would make of their unethical behaviour.

Your views and comments would be greatly appreciated. Thanks in advance

honeypop

You can't have it both ways, regardless of what they told you as they may not have realised it at the time, but you can either have your payment excluding holiday pay and it be tax free, OR you can insist on the holiday pay but it must be taxed - this includes the whole amount you were paid not just the holiday pay. It cannot be tax free if you require the holiday pay, this is the rules.

Unless by having the holiday pay included and still being taxed would be beneficial to you money wise, then currently you are better off keeping it as it was. Not what you want to hear but as I said, it's the rules. I can't believe ACAS told you you should be paid the holiday pay tax free, as having dicussed the same issue with them recently, it wasn't what they said. Mind you, they did give out a lot of wrong info too, so I decided not to take their advice as 'legal advice'.

As for their unethical behaviour, it's you that is wrong I think, so they'd probably not be bothered who you told!

fengirl_2

Holiday pay is taxable and no amount of agreements to pay it tax free will alter that fact. I suspect that the original perosn who agreed to pay it tax free was unaware of the law and the company has now taken proper advice. A contract cannot include something which is unlawful.

Conor_3

Where is the option for:
Company were correct.

There is no way at all to avoid being taxed on the holiday pay. Think yourself lucky. Technically, they didn't have to give you any redundancy at all and could have dismissed you without reason due to length of service.

amitsharma_2

fengirl wrote: »

Holiday pay is taxable and no amount of agreements to pay it tax free will alter that fact. I suspect that the original perosn who agreed to pay it tax free was unaware of the law and the company has now taken proper advice. A contract cannot include something which is unlawful.

as I stated in my original email - I am aware that holiday pay is taxable but when the CFO of an organisation agrees to pay it tax-free. i think they have to honour the agreement.

Its like saying, I place a signed order of 500 pieces of part A. The manufacturer makes them and ships them over. In the meanwhile, the legislation has changed and part A can no longer be used. At this point, I cannot go back to the supplier and say that I do not want the parts because it is illegal. I still have to pay him as part of the agreement whether I use the parts or not.

The CFO of the company knowing all the rules and regulations arrived at a settlement package. I am not saying that tax should not be paid to the government but as per the package proposed by the CFO, that tax should be payable by the company and not me.

So essentially the company should be paying me the due amount + the tax liable so that when the amount is taxed, I have the equivalent tax free amount.

I hope that clarifies where I am coming from.

amitsharma_2

honeypop wrote: »

You can't have it both ways, regardless of what they told you as they may not have realised it at the time, but you can either have your payment excluding holiday pay and it be tax free, OR you can insist on the holiday pay but it must be taxed - this includes the whole amount you were paid not just the holiday pay. It cannot be tax free if you require the holiday pay, this is the rules.

Unless by having the holiday pay included and still being taxed would be beneficial to you money wise, then currently you are better off keeping it as it was. Not what you want to hear but as I said, it's the rules. I can't believe ACAS told you you should be paid the holiday pay tax free, as having dicussed the same issue with them recently, it wasn't what they said. Mind you, they did give out a lot of wrong info too, so I decided not to take their advice as 'legal advice'.

As for their unethical behaviour, it's you that is wrong I think, so they'd probably not be bothered who you told!

Thanks for the advice but there is a difference here - when I was paid my redundancy pay tax free - I was paid the amount and the additional taxable amount was paid as well so that when I was taxed, I had an equivalent tax free amount. The same should have happened with the holiday pay as that as what they agreed to.

Its like saying, heres £10, you will pay £4 tax, so heres an extra £4 - something like that. So its not that the holiday pay was to be tax free but rather the fact that the tax was to be covered by the firm.

Also, it was not a case of them paying me my holiday pay and then stating that holiday pay is paid PAYE and so the lower amount. They simply chose not to pay and respond to my enquiries for 2 months and then changed their stance on paying the taxable amount.

Thanks

amitsharma_2

Conor wrote: »

Where is the option for:
Company were correct.

There is no way at all to avoid being taxed on the holiday pay. Think yourself lucky. Technically, they didn't have to give you any redundancy at all and could have dismissed you without reason due to length of service.

I don't think so as I had been employed for 9 months - so a dismissal without reason was never on the cards - and there were some glaring misrepresentations with which I was hired in the first place. As mentioned, the settlement package was agreed based on my agreement that I would not be pursuing claims against my firm in those areas.

As I have responded to the others who have been kind enough to share their views, I am not saying that holiday pay should not be taxed but rather that as per the agreement of a tax free lumpsum, the tax due should be paid by the company. Also my greater irritation stems from the fact that they simply chose not to pay me at all and did not respond to me for 2 months until I threatened tribunal action. thx

LucasRenfrew

I am amazed at your attitude. You had been there for 9 months so were actually entitled to nothing except statutory redundancy and perhaps not even that. The company has (according to you) financial problems and you seek to waste their time which could be spent saving the business by taking advantage of the words of someone who is probably under a lot of pressure. You know I once had to make 24 people redundant, one of the worst days of my life and I am sure I was not 100% perfect on everything that day.

I wonder what the "unfair dismissal, mishandling and misrepresentation" claims were (please do not give me the details). Sounds to me like you are out to take any employer for what they have, giving other employees a bad name.

fengirl_2

You were employed for less than 2 years and were not entitled to redundancy, but they have paid it to you. This is not taxable, so you have correctly been paid gross. Holiday pay is taxable and you have paid tax on it.
You were employed for less than 12 months and they did not need a reason to get rid of you. Unfair dismissal at under 12 months can only relate to equal opps issues.

amitsharma_2

LucasRenfrew wrote: »

I am amazed at your attitude. You had been there for 9 months so were actually entitled to nothing except statutory redundancy and perhaps not even that. The company has (according to you) financial problems and you seek to waste their time which could be spent saving the business by taking advantage of the words of someone who is probably under a lot of pressure. You know I once had to make 24 people redundant, one of the worst days of my life and I am sure I was not 100% perfect on everything that day.

I wonder what the "unfair dismissal, mishandling and misrepresentation" claims were (please do not give me the details). Sounds to me like you are out to take any employer for what they have, giving other employees a bad name.

I will not attempt to explain to you to bore you as such as I am thankful for your post as it helps me ensure that I am prepared well at my tribunal hearing for what comes my way. However, it is surprising that you choose to side with an organisation who for two months did not inform me as to why they were not paying funds they had agreed to until I mentioned tribunal action. One quick point on misrepresentation through - I was given company shares as a signing bonus (shares which did not exist and no visibility of share membership rules inspite of asking repeatedly) and a fantastic incentive plan (which I realised within 2 weeks of joining could not be achieved due to infrastructure problems at the firm).

So whilst you may question my intelligence in sticking around with such a firm for 9 months, please do not question my attitude where I have waited patiently for 2 months to be paid and it has not happened.

I really don't have sympathy for large firms which land dire financial positions such as my ex-firm has through mismanagement at the top.

Lastly, the amount involved is rather small and I have chosen to go to tribunal not because of a few 100 quid but rather as a matter of principle but it seems you would rather have big firms like this let off the hook because they have more importnat matters to deal with than ex-employees and their unpaid dues.

Idiophreak

I'm not sure people aren't being a bit harsh on the OP, here.

It seems to me they agreed to a tax-free amount *equal to* the owed holiday pay + a lump sum. Not the holiday pay itself. (All a bit of a grey area, surely).

I don't see why everyone's so down on the OP for just trying to get what they thought had been agreed...