Liable for Tax/NI if re-employed by same company

sagalout1954

This is weird. Recently redundant, quite amicable (I wasn't bothered and uninterested in redeployment opps).

Supervisor thought I might like to go on their in-house 'temp' register given that I am familiar with the company, cheaper and would need less supervision & induction than agency staff. Could slot in on ad hoc basis in various areas (admin/finance/secretarial), they have several staff who do this already.

Initially told that couldn't be done for 2 years, then told there was no time limit for returning. So, they had a bit of work for me today & I went in for the first time on 'temp' basis (I'm actually still on PILON).

After couple of hours a more senior manager said this wasn't allowed, there WAS a "can't return for 2 years" rule. She had a document produced by HR which clearly stated that if anyone was made redundant and re-employed within this time frame, they may be liable for income tax, employees NI (& the complany liable for employers NI) on their redundancy money???!!

Now, I can fully appreciate that some firms may have a 'no return' rule, or operate a form of 'claw back' of redundancy pay in certain re-employment circumstances. But HR officially telling managers that to re-employ may make the employee liable for tax/NI on their redundancy payoff doesn't sound at all correct.

Or is it...................? Anyone know the definitive answer? I'm not bothered whether I temp there or not, as long as they aren't preventing me because of wrong HR info (sadly their HR is famous for not being capable of organising a p!ss up in a brewery).

Weirdlittleman

I would imagine it is legal to tax and NI any non statutory redundancy payments as they are contractual and if the terms are not followed it could be deemed an employment sum.

A lot of companies would actually clawback the full payment rather than just tax and NI it.

getmore4less

No one has ever backed this* up with anything legal for a genuine redundancy on this forum ot the others I use.

Company policies can put in what they like, 3 months is common to avoid ET claims.

Ask them to get HR to produce the legislation that determines this, many people would be very interested.

Good chance they will back down.


*This being any legal clawback of redundancy or tax or NI on reemployment

sagalout1954

Ah, good point WLM. Your response clarifies it a little better for me. I was TUPE'd from a Local Authority to a company of dipsticks contracted to make a better job of delivering a specific range of services. As a result I remained on a better redundancy package with enhanced payment/terms.

Originally they said I'd have to pay tax/NI on the enhanced bit, then backtracked when I sent them the Directgov link stating 30k of redundancy dosh is tax/NI free. Perhaps they meant the enhanced bit of my payoff would be liable for tax/NI if I returned within 2 years.

Though that may be debatable given that I wasn't on their Terms and Conditions, nor subject to their Redundancy Policy. The LA I worked for have a different 'rule' in that one cannot return for 5 weeks, I wonder if this company are quoting their own Redundancy Policy - which I may not be subject to. Hmm, I feel an email to their HR coming on!

mjm3346

If the redundancy was genuine there should be no tax/ni to repay to the revenue, it is up to the company what restrictions they wish to place on re-employment but they will want to make sure there is no legal continuity of employment so they can restrict employment rights for the first year.

The legal clawback would be if it was deemed tax avoidance by HMRC if they took the view that the dismissal and re-employment was a sham designed to evade tax (not the employers decision).

sagalout1954

Thanks mjm, you've given me a few good 'lines' to quote when I ask questions. It was a genuine redundancy, the ad hoc 'temping' I was going to do didn't include any of my old work and was actually convenient for both sides (bit of occasional pocket money for me and cheaper than agency staff for them - wasn't even my suggestion, it was theirs).

Oh well, not worth making a fuss but I'd like them to double check HR's advice - they haven't been known to get anything right so far!

patman99

I think they have realised that if you return to a former employer within 12 weeks of being made redundant, this counts as continuation of employment and if you are kept-on on a rolling temporary contract, if they make you redundant again you will be entitled to redundancy right back to the day you started.

Pete111

Are you employed via an agency?

If so you are not employed by the company but by the agency in question.

getmore4less

patman99 wrote: »

I think they have realised that if you return to a former employer within 12 weeks of being made redundant, this counts as continuation of employment and if you are kept-on on a rolling temporary contract, if they make you redundant again you will be entitled to redundancy right back to the day you started.

Continuity is normaly broken by a week not being on contract not 12 weeks.

There are some exceptions, the NHS has some but it may be there are some special rules for TUPE'd ex LA employees that are still on LA T&C's.