Ex-employer has made an offer via ACAS - what to do now?

Casey1709

Thanks to the brill advice on here I've submitted a claim to an Employment Tribunal and believe I have a good chance of winning though nothing in life is certain.

My ex-employer is obviously worried they'll lose the case as they've made an inital offer to me via ACAS which i rejected and now they've tripled it so its quite sizeable. Can anyone tell me whether its likely to be taxable, or if the first £30k is tax free like for a redundancy payment. At the moment, ACAS haven't said whether its to be paid as compensation, or as a compromise agreement or something else.

Any advice on what questions I should ask or what I need to double check first would be gratefully recieved.

xxlaurissaxx

Not got any advice but well done xx

dampsquib

Casey1709 wrote: »

Can anyone tell me whether its likely to be taxable, or if the first £30k is tax free like for a redundancy payment.

My understanding is that it depends on what the payment is for. Any money awarded by a tribunal, or received in a settlement which avoids a hearing is tax free up to £30,000 if it is in respect of a redundancy termination payment, but anything paid in respect of a period of notice would be taxable as ordinary income. Basically .... HMRC want their share even if money is awarded by a tribunal or paid under a Compromise Agreement.

zzzLazyDaisy

Payment in lieu of notice is only taxable if there is a clause in the employment contract stating that the employer reserves the right to make a payment in lieu of notice. Because of this tax treatment, such clauses are now unusual. If there is no such clause, then the PILON is counted as compensation and is not taxable provided the over-all figure is less than £30,000

The payment would not be made under a compromise agreement, instead ACAS will draw up a settlement agreement in consultation with the employer, and the concilliation officer will then read it out to you over the phone. Once you are both happy with the wording, the agreement will be signed by both of you and you will be given a copy. Once that has been done ACAS notify the tribunal and they close the case.

dampsquib

zzzLazyDaisy wrote: »

Payment in lieu of notice is only taxable if there is a clause in the employment contract stating that the employer reserves the right to make a payment in lieu of notice.

HMRC will also tax PILONs as ordinary income if it is customary for the employer to pay them
- see hmrc.gov.uk/manuals/senew/SE12977.htm
(NB: My newbie status won't allow me to post the actual link)

very_berry

Once you are both happy with the wording, the agreement will be signed by both of you and you will be given a copy. Once that has been done ACAS notify the tribunal and they close the case

Just to clarify, an Acas settlement is binding at the verbal agreement stage and they'll notify the Tribunal before the paperwork is sent out to the parties.

Without knowing the precise jurisdictions or settlement terms is difficult to comment on the tax position (other than the general rule regarding the first £30K paid as compensation) but bear in mind that you can always ask Acas to write into the agreement that the settlement is to be paid without tax being deducted, your joint understanding is that tax isn't due on the payment, but should it become due then the respondent will meet any tax due.

Casey1709

Thank you all for the replies, they're very helpful.

I've already found other work so I'm not worried about the reference. As for PILON, they gave me 3 months notice of a new, worse contract which I rejected and so they made my life a living hell.

I especially like the payment to be tax free suggestion and the respondent to pay any tax due. Thanks very berry.

I'm now waiting to hear whether they will accept my counter offer.

Joannef_2

Hi Casey1709

It looks like I will be submitting a claim to the Employment Tribunal soon. Would you mind telling me roughly how long it took between you submitting your claim and your employer making you an offer. Does ACAS speak to both sides to try and get it resolved to avoid going to the tribunal? I've been looking through the details on the ACAS website and it all looks quite daunting!

Thanks, and well done on your case.