What does this really mean?

kelloggs36

Can anybody tell me in legal terms what the following means?


You would leave work next Friday 16 December, at the end of term.
2. You will receive your December salary.
3. Your termination date will be 31 January.
4. You will be given authorised absence up until 31 January.
5. You will be paid up until 31 January 2012
6. You will receive three months salary, tax free, (February, March and April)

with particular reference to the last bit - does this mean net salary but not paying tax on it as a lump sum, or does it mean gross salary of 3 months?

Thanks!

SarEl

It means that from 17th December - 31st January you will be paid as normal and are on gardening leave. You are still employed - you are on authorised absence. But you can be recalled to work during that period.

The last point you have to ask the employer about. This appears to be PILON, which up to £30k (which includes any redundancy payment in that amount) is a tax free allowance. But some employers pay it gross and some net - there is no absolute rule on this.

getmore4less

Is this all you have had relating to this termination?

kelloggs36

Yes - it is a long story and is the end of a horrific time, but I have not had anything in writing other than the e-mail which states this.

LittleVoice

kelloggs36 wrote: »

6. You will receive three months salary, tax free, (February, March and April)

with particular reference to the last bit - does this mean net salary but not paying tax on it as a lump sum, or does it mean gross salary of 3 months?

Thanks!

I think the clue is in the underlined phrase. It's 3 months salary (any deductions are deductions and as far as your employer is concerned your salary is the gross amount). Unless you earn £120K/year, you will not have to pay tax on this. The employer does not appear to intend deducting tax as they acknowledge it is not subject to tax.

However you do yourself need to be sure that this payment is not a contractual term. If there is provision in your contract for the employer to pay PILON and part of this is PILON then it would be taxable. If, however, you are entitled to no more than 6 weeks' notice then the extra 3 months is not PILON.

SarEl

You still need to check with the employer what this means. There is a lot of confusion amongst both employers and employees about what PILON is - is it a tax free allowance, and this leads to assumptions that it means gross salary and not net salary. There is a difference between a tax-free amount and a tax-free allowance. The former is an amount of money that does not have tax deducted from it (and which may or may not be taxable income depending on the circumstances); the latter is an amount of money which is not counted as taxable income by HMRC. Saying that something is "tax-free" does not clarify the amount of the payment - as I said previously some employers routinely pay PILON at net salary; others at gross.

chemistryboy

I hope your union were involved in this process and they gave you advice. It sounds like a typical parting away that goes on in education where you are not happy with them and the same may be true with you. If that is the case take the money and move on. Again try to ensure with your unions help you get a satisfactory reference so you can find another job. The salary up to Jan 31st will be taxed etc but the 3 month salary beyond that will be the equivalent to 3 moths net salary as a kind of severance payment.