Returning to the same company after being made redundant

harrych

Hello,

I am being made redundant at the end of this working month (having worked my notice in full). My company have been great with me and offered a decent redundancy pay-off which I am very happy with. However they have now come back to me and asked me to return on a rolling contract for a duration expected to be around 6-8 months. If I agree to returning:

1) Will the I liable to pay tax on tax free part of my redundancy pay off (My company wont ask for this but I have to complete annual tax returns)?
2) Will this invalidate my redundancy insurance (as I may only end up returning for a month or so)
3) If after a set period of time I am offered a permanent role, will I be liable to pay back some of my statutory redundancy (not to the company - but the government/tax man)

I'd really appreciate some help on this as I am finding the whole situation very confusing.

Thankyou in advance,
Harry

ExIT

Hi,

Returning to your previous employer on a temporary or permanent basis is no different to working for another company, so.....

(1) No, redundancy payment is tax free.

(2) I would have thought that your insurance would only pay out from the time of redundancy until you start another job. If you only work for a month that's your choice, might be better to take the insurance payments and look for a permanent job in that case.

(3) No, as above, it's tax free -full stop.

Cheers,

Neil.

littlefeet_2

One thing to check is if there are any conditions on the employers side you need to be aware of.

My company used to pay an enhanced redundancy package, and one of the terms of that was that you could not be rehired directly by the company (so ok to come back as a contractor via an agent) within 3 months of your redundancy. Come back any earlier, and you had to pay back the enhanced part of the package to the employer.

<edit> This was all part of the contract with the company, not related to the government or HMRC.

harrych

Thankyou all for your advice.

littlefeet - I have checked with my company and there are no clauses to speak of.

ExIT - My HR lady has checked with a solicitor and it seems that I was right to worry. Inland Revenue have introduced laws to prevent abuse of the redundancy process (although this is definitely not what is happening in my case). They are still a unclear on the tax implications should I return - but there may definitely be an issue. This is a little scary as if there is a problem Inland Revenue will no doubt chase me for the tax rather than the company!!

patman99

Be aware that if you return within 12 weeks of being made redundant that this counts as continuation of employment, so when you get made redundant again, you will be entitled to redundancy pay right back to the first day you originally began working for them.

jdturk

patman99 wrote: »

Be aware that if you return within 12 weeks of being made redundant that this counts as continuation of employment, so when you get made redundant again, you will be entitled to redundancy pay right back to the first day you originally began working for them.

Is that not why the poster above stated that if you get rehired within 3 months you could be asked to pay the redundancy back...

getmore4less

patman99 wrote: »

Be aware that if you return within 12 weeks of being made redundant that this counts as continuation of employment, so when you get made redundant again, you will be entitled to redundancy pay right back to the first day you originally began working for them.

Please provide a link to the legislation that covers this.

Anything more recent than this?
http://www.opsi.gov.uk/si/si1996/Uksi_19963147_en_1.htm

Edit:
My understanding of that link is that an employer recreates continuity IF they get a repayment of any part of a redundancy payment. Without this the continuity is broken on redundancy and the 1 week rule

http://www.businesslink.org/bdotg/action/detail?type=RESOURCES&itemId=1082185418

caeler

I nearly had a heart attack when I read continuous service could still apply despite a 12 week break. Thank you to gm4l for correcting!

Were you paid Pay in Lieu of Notice tax free? The HRMC will DEFINATELY want some of this. However in practice I do not have any experience on how it works, a tax code adjustment or what. Perhaps you could call your local tax office and ask what would happen should you recommence employment for your old employed who paid you the redundancy compensation tax free.