Help employer tribunal offer

ridicullous

Friend was going to tribunal against employer.

They have offered small -several k -settlement.

She is fears it will mean overpayment of tax credits to date, or will be taxed and/or will stop her receving same in future -so no better off.
Is she better off going to tribunal or will the payment be wiped out by HMRC ?

ceeforcat

Generally this payment will take the form of compensation. It will not be taxable and will not affect tax credits as it is not regarded as income for either purpose.

John_Pierpoint

Who is "they" ?

I rather think it is former employer seeking to do a private deal, with a no publicity gagging agreement, as well as avoiding the costs of being represented at the tribunal?

Would this be dressed up as redundancy money ?

Can we take it that this is an "average" job paying "average" wages: 20% (plus NI) type taxation ?

Is "friend" claiming benefits or does "friend" have another similar job now.

Does this still count as compensation - like having a hand chopped off in the machinery?

I don't know the answers to these questions, I'm just asking for the sake of clarity.

[However I did agree to be made "redundant" in similar circumstances in exchange for a much enhanced deal and dependent on not making an appeal to an employment tribunal - the enhanced payment was held back until the deadline for a tribunal hearing had passed.]

ceeforcat

Possibly John - I assumed that the payment was an out of court settlement as many of these payments usually are - often outside the tribunal doors.

chrismac1

I was 15 years ago a recipient of one of these, £15k it was and very nice too. This was not a contractual entitlement and was damages for breach of contract. As DAMAGES it was non-taxable. This is the key - my employer knew the rules and was very careful in the wording of the termination letter so it was 100% tax free.

It is an area of contention and there have been a fair few cases in this area of employment law, usually the tax involved is no small beans. But in essence if the payment is in respect of damages for breach - as apposed to some sort of contractual entitlement built into the comtract of employment, or implied in it by custom or practice - then it is tax-free.

ridicullous

Hi, it is for breach of contract by employer. She has children, pregnant and made redundant
after telling the employer she would need maternity leave!