Compromising......

hcb42

All still a bit raw, so apologies in advance if not thinking straight.

Husband has worked for same company, in HO for a major UK and indeed global retailer for just under 7 years in a mid management role, he is 50 years of age (but way too young to retire and nowhere near enough in the retirement pot to even think about that!)

He went in today and was walked from his role, no notice, was advised to get a lawyer and a compromise agreement would be sent to them. So we still dont know the offer, as they wouldnt tell him. Sorting a lawyer tomorrow. No one was present at the meeting other than immediate line manager, who muttered something about "without prejudice"

he is on a 3 month notice period, and there have been no formal warnings or issues raised.

My question is for those who have done a compromise agreement before - what would be a "typical" offer in these circumstances over and above the 3 months PILON e.g. should we expect a "redundancy package" on top, even if framed another way? I realise these things vary enormously, but we need to protect ourselves as much as possible, particularly as 5-6 weeks of the notice period will be eaten up by businesses not doing very much in the way of recruitment at this time of year. And we have thought about holidays owed/pension contribution/reference etc.

We are due to go out on a big international holiday in a few days time too, which has been booked for nearly a year - and now that is threatened (not that the employer will give two hoots about that I realise, just a lot for us to consider whether we even go now)

Sambucus_Nigra

You don't know the offer as that's why they have advised that you get a lawyer!

Does he know what he did wrong/is being blamed for?

Uncertain

Sambucus_Nigra wrote: »

You don't know the offer as that's why they have advised that you get a lawyer!

Does he know what he did wring/is being blamed for?

You have to be advised by a lawyer who has to issue a certificate for a CA to be valid.

It is normal (though not a legal requirement) for the firm to pay towards this as part of the settlement. If they do then it would normally only be just enough for the lawyer to do the minimum legal requirements. In other words they are unlikely to pay for the lawyer to argue with them!

It may well be worth spending a little yourselves in this direction.

As to how much, well obviously they must cover 3 months pilon plus outstanding holiday (accrued up to the end of the notice period), beyond that it is a case of what will persuade you to sign away your rights to sue for unfair dismissal.

Sadly the national average tribunal payout is only around £6K, it is the handful of big ones you tend to hear about rather than the norm.

Beyond that it depends on the circumstances. Any CA will contain a confidentiality clause so they are effectively buying your silence. What, if anything, this is worth varies enormously.

It will also be "without admission of any fault or liability".

It is normal for a CA to include an agreed reference and this can be valuable. Make sure it also says that the firm must not provide any other information without your express permission.

It is almost impossible to guess how much they will pay beyond the above. Six months salary maybe?? This part would be tax free (up to £30K).

Sometimes this forum gets bogged down with "Can they sack me" questions. If they are prepared to reach into their pocket a little the answer is always yes as you have just experienced.

In some fields this type of situation is (or at least was) the norm. For several years I did regular contract work for a small (c 25 staff) highly successful business. The turnover of roughly half of the staff was non stop. If the boss woke up one day and decided a particular person no longer suited they were phoned and told not to come in again and that the lawyers would be in touch! On the other hand the ones he did like were well rewarded.

Happy to contribute further if I can help.

Sambucus_Nigra

Uncertain wrote: »

You have to be advised by a lawyer who has to issue a certificate for a CA to be valid.

Yes I know that.

However, being told at the start to leave and get a lawyer suggests that he is a scapegoat and hence, could possibly negotiate a decent CA payout here.

Uncertain

Sambucus_Nigra wrote: »

However, being told at the start to leave and get a lawyer suggests that he is a scapegoat and hence, could possibly negotiate a decent CA payout here.

Maybe.

However, as I mentioned, some firms operate like this as a matter of course (except perhaps in cases of the most blatant misconduct) as they see it as a hassle free way of getting what they want at a modest cost.

Emmzi

It all depends on why he is being asked to leave.

Face doesn't fit? Money to compensate until he finds another role and a little for his hurt pride. 6 months wages + benefits would not be uncommon.

He screwed up? Damn all.

Things like references, good leaver status etc may be as important as the money.

hcb42

He didnt screw up. No warnings, no performance discussions, no nothing. Nothing on last six monthly performance review plan. More face doesnt fit, with imm line manager, whose own role was significantly reduced over last year - which impacted my husband's role - so he is being a scapegoat to protect his role. However I realise a lot of that is academic now.

I take it the three months PILON is taxable, but anything else he negotiates over that would generally not be?

I realise we need a lawyer, and am prepared to throw a bit of money at lawyer's fees to get the best all round outcome we can for survival, neighbour is a lawyer, albeit not in this area, and has recommended a firm to us this morning, so hopefully things might become clearer today.

THanks for the help so far. He has never been out of work, not even for one day. (Not that it matters...I know)

Uncertain

hcb42 wrote: »

I take it the three months PILON is taxable, but anything else he negotiates over that would generally not be?

Anything that is a contractual right is normally taxable just as if he were still working. Compensation however is tax free up to £30K.

caeler

Anything in this compromise agreement is likely to be regarded as earnings so tax will be due so be aware of that. Sometimes company's want people to leave, they might be having a reshuffle and think its easier than going through consultation/redundancy route. I'm disgusted at how your husband has been treated, anybody that I've had to compromise, I've sat them down fully explained what is going on and why, explained who they can contact if they have questions, yes they need to be escorted off the premises but there are ways to do this. I recommend you do some sums. What would your husband need to walk away and not make a claim for unfair dismissal, etc? A CA is signing away his employment rights for a sum of money. A year salary? Equivalent redundancy package? A years salary + Notice + equivalent benefits BUPA, company car value, etc. Ultimately your husband could reject this and the company could find them in a sticky situation. There will be a confidentuality element to the CA too, double check that through. Also if your husband is in sales or something they might throw things in about not talking to clients for 6 months or worst still not working for competitors, etc. Slightly unenforcable these days but get a solicitor that specialises in employment law and hold tight. Good luck.

caeler

Tax is complicated, I think the £30K free has to relate to redundancy termination but I'm not totally sure. Here is a link to the HMRC manuals on tax treatment you might be able to figure how what would be due. http://www.hmrc.gov.uk/manuals/eimanual/eim12800.htm You don't want to agree a certain sum then realise tax has to be paid.

Uncertain

caeler wrote: »

Tax is complicated, I think the £30K free has to relate to redundancy termination but I'm not totally sure.

Anything in this compromise agreement is likely to be regarded as earnings so tax will be due so be aware of that.

No, not so.

Compensation for loss of employment is normally tax free up to 30K, it doesn't have to be redundancy.

Anything that was a contractual right (e.g notice pay or holiday) is taxable.

The standard wording sets out what the parties believe the tax position to be but leaves the employee responsible for any tax that should have been deducted if HMRC decide this is wrong!

Obviously, like everything else, the wording is negotiable! It depends who is in the better bargaining position.