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Been given notice today :-(
Comments
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And this is exactly my concern. Since the agreement between the company and me only says that I will be entitled to 90 days notice (and pay), it seems to me that without "faking" a new agreement, HMRC would consider a lump sum payment as taxable income and not a real compensation for losing my job.
SoSad
Does it say whether the 90 days' notice can be paid as a lump sum?I am an employment solicitor. However, my views should not be taken to be legal advice. It's difficult to give correct opinion based on the information given by posters.0 -
Ewarwoowar2 wrote: »The *should* go through a proper redundancy process: consultation, identify pool of employees at risk, selection procedure, dismissal hearing, etc... If they don't then the dismissal is likely to be unfair.
Hmmm, I am the only one in Marketing and also Heading a group of sales guys. The only thing I was told this week is that due to lack of cash, they have to let me go and that the CEO will take over my duties. As I am one of few highly paid guys left in the company, that seems to make sense to me, from a pure (short-term) cash perspective at least. But other than that, what sort of consultation should they go through? Selection process? Well, maybe find the guys with the highest salary and look who of this group we could fire first? Dismissal hearing? Well, CEO and CFO sat down with me, describing the financial situation and that, as a consequence, I will have to go. Not sure what qualifies as a "dismissal hearing"!?
Given the company´s financial situation and the dismissal process described by me so far, do you think there´s a point in going to court and appeal on the grounds of unfair dismissal? As I said, I will have to go to a lawyer once back in the UK after Christmas but would be good to know your opinion on this.
SoSad0 -
If my last official working day is 31 March 2010 and I started on 1 April 2008, this would be exactly 2 years, wouldn´t it?
SoSad
http://www.acas.org.uk/index.aspx?articleid=1461
If you have a minimum of two years' service, statutory redundancy pay entitlement is as follows:- Employees aged 22-40 get 1 week's pay (which is capped at £380pw) per full year worked.
- Employees aged 41+ get 1.5 weeks' pay (which is capped at £380pw) per full year worked.
BrionaIf I don't respond to your posts, it's probably because you're on my 'Ignore' list.0 -
Ewarwoowar2 wrote: »The *should* go through a proper redundancy process: consultation, identify pool of employees at risk, selection procedure, dismissal hearing, etc... If they don't then the dismissal is likely to be unfair.
That is correct, but redundancy procedures can be processed quite legally and fair in less than 'a couple of months'.
As the OP was subject to a redundancy procedure, I gather there were less than twenty employees which does not require any defined period of consultation period, although some meaningful consultation does have to take place. Whether the discussions to date can be deemed as meaningful is open to debate however.
Furthermore, the OP has stated that he would have been in a 'one from one' situation so there would be no selection pool as such by virtue of the OP being the only person performing a specific role, so there would be no selection matrix to be scored.
Going through the above procedures that Ewarwoowar has highlighted, and assuming the affected person appealed which could add up to 5 days to the procedure, this could be expedited quite fairly within a matter of a couple of weeks max - very likely in less time.
But I feel we are drifting off the OP's original querie which was
" rather than paying me till the end of March they offered to to pay the Jan - March salary as a tax free redundancy payment"
A salary is a salary - redundancy payment is redundancy payment!
I am still of the opinion that the payment cannot be deemed as a 'redundancy payment'. I can hear what some posters are suggesting, but if the OP is not legally entitled to statutory redundancy payment by virtue of insufficient service, would HMCR accept the payment as a redundancy payment and be happy with the potential tax free status that is associated with such a payment?
If the company paid redundancy up to two years (which the OP has not even completed) that would only equate to £760.00 that would potentially be eligible for tax free purposes, however, enhancements could boost that.
I would reckon the best place for advice would be the HMRC as there seems too many ambiguities on this particular issue.0 -
I realy don't see the problem here,
You don't need to have two years service to recieve a redundancy payments or compensation for a breach of contract.
A company can pay as much as it likes in redundancy and compensation it does not matter how long you have worked allthough over 2 years service there are some statutory minimums as pointed out allready.
The employer is offering PILON which is very common, not a redundancy payment.
PILON can be paid tax free if the circumstances are right.
If your contract does not allow for PILON then it can be tax free up to £30k(total of all payments) subject to HMRC approval. If the contract does allows for PILON then it is much harder to get it tax free.
This where you and the company need legal/tax advice to make this happen.
I think the offer is a good one if money is that bad, it may even help the company since it can put the cost into this quarter rather than the next.
Also gives you 3 months to seek alternative employment without any ties(make sure that they are no competition clauses).
In a situation like this(senior level, one job) where you had a meeting to discuss the finances that looks like reasonable consultation if you agree there is realy no alternative, allthough you should be given a chance to make alterative proposals if you can think of any.
Don't forget outstanding holidays and compensation for loss of benifits for those 3 months0 -
getmore4less wrote: »The employer is offering PILON which is very common, not a redundancy payment.
PILON can be paid tax free if the circumstances are right.
If your contract does not allow for PILON then it can be tax free up to £30k(total of all payments) subject to HMRC approval. If the contract does allows for PILON then it is much harder to get it tax free.
This where you and the company need legal/tax advice to make this happen.
Don't forget outstanding holidays and compensation for loss of benifits for those 3 months
I reiterate - please read the original post.
"they mentioned to me that rather than paying me till the end of March they offered to to pay the Jan - March salary as a tax free redundancy payment"
The OP is not being offered PILON (as defined by HMRC) but a REDUNDANCY PAYMENT. The offer of money is not in dispute but the OP has stated the employer is offering a tax free redundancy payment.
PILON IS PILON
A SALARY IS A SALARY
A REDUNDANCY PAYMENT IS REDUNDANCY PAYMENT
PILON and REDUNDANCY PAYMENTS are two different beasts and will likely be treated as such by the HMRC.
SALARY is earned income - and is subject to NI payments, Income Tax and other deductions such as pension contributions, health care etc etc.
Nobody on this thread has provided a definitive answer and due to the ambiguity and seemingly dubious nature of the offer, as I suggested earlier, it would be prudent in my opinion to contact HMRC do clarify the matter.
If indeed it is stipulated in the contract of employment that 3 months notice would be given (or paid in lieu of) at termination (irrespective of service) then that is a different matter, and the reality is that the OP is only getting what he is entitled to as per his contract of employment.
This would seem not to be an employment law issue but one for the tax man I would have thought, however, I am under the impression that there is some confusion as to the actual terminology of the payment on offer.0 -
But I feel we are drifting off the OP's original querie which was
" rather than paying me till the end of March they offered to to pay the Jan - March salary as a tax free redundancy payment"
A salary is a salary - redundancy payment is redundancy payment!
I am still of the opinion that the payment cannot be deemed as a 'redundancy payment'. I can hear what some posters are suggesting, but if the OP is not legally entitled to statutory redundancy payment by virtue of insufficient service, would HMCR accept the payment as a redundancy payment and be happy with the potential tax free status that is associated with such a payment?
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It's not a statutaory or contractual redundancy payment. It's payment in lieu of notice. The company are not really making him redundant. They are offering to end his employment now i.e. breach his contract of employment. In order to enduce the employee/OP to agree to this, they are offering him a lump sum which just happens to equal three months salary.
If his contract of empployment does not allow PILON then it's potentially a tax free payment. However, he nedds proper legal advice on this cos it's tricky and minor mistakes could make the lump sum taxable. For example, the compromise agreement and the payment of the lump sum should be made after his employment has ended.I am an employment solicitor. However, my views should not be taken to be legal advice. It's difficult to give correct opinion based on the information given by posters.0
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