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Just in case questions: salary sacrifice (and accrued holidays)

edited 8 July 2014 at 5:18PM in Redundancy & redundancy planning
6 replies 2.2K views
SnakeySnakey Forumite
1.2K Posts
Didn't happen, fortunately, so I've removed the post as it has some vaguely-identifying information in it (in conjunction with everything else I've posted on here anyway - the internet is a strange place and you just never know who might be sad enough to root through a person's posting history). Thanks for all your help though!

Replies

  • getmore4lessgetmore4less Forumite
    46.3K Posts
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    Forumite
    Lets start with the notice.


    Only statutory notice counts towards redundancy service if this would make the termination date later(PILON)


    That makes the last day they can serve notice and terminate early as 8 June so you have the 14 year service if that ticks over 1st Sept.


    Holidays(1,2),


    With 3 months notice it will be possible for them assume you could have taken them with PILON or Garden leave, if you work notice then you accrue and normal holiday allocations apply.


    Although some companies will accrue holidays and pay them your worst cases is you accrue up to termination date then take off the days taken(don't forget to include BH if not included In the 28 days). So prorate for the holiday year.


    Compensation for loss of notice should put you in a position as if you had worked the notice subject to any regulations that may mean you have to take the cash so the "salary".


    If they make a habit of paying PILON or have it in the contracts it will be taxable.
    statutory "weeks pay" is capped at £464.


    JSA claimable from the termination date.
  • Snakey wrote: »

    . . .

    I get 28 days annual leave per calendar year, and so far I have taken 4.5. In the next three months, I have got 15 days booked. Is that 28 inclusive of bank holidays? If not, do you work on bank holidays?

    . . .

    1. Do I accrue holidays during my notice period Yes (or, if I get a PILON, do they have to uplift the amount to also pay me for the paid holidays I would have accrued had they not breached contract - negotiate on this)?

    2. Can they deem me to have taken them during my garden leave/hypothetical notice period, so that they don't have to pay me for them after all? They can't "deem" it (that is, simply calculate things on the basis that you have taken the holiday) - they would have to give you appropriate notice to tell you to take the holiday.

    . . .

    Oh, State benefits I suppose, in particular signing-on dates. Presumably if I get put on garden leave I'm not technically unemployed so I would sign on in September and get six months' JSA starting at that date (correct), whereas if I get PILON I have to sign on right away (yes, you can sign on immediately) but I don't get JSA for three months because I was given money to cover my notice period (no, they no longer take that PILON into account)?

    Some responses.
  • SnakeySnakey Forumite
    1.2K Posts
    Thanks both for responding to my horribly long set of questions/angst!

    LV - I get paid time off on bank holidays as well and they aren't included in the 28 days. Does that make a difference?

    That's good news that they don't take the PILON into account for JSA payments. I would hope to get a new job fairly quickly, but in the meantime - or if it turns out to not be that easy - £71 a week is not to be sneezed at.

    getmore - Even if they pay me in lieu of notice they still have to calculate redundancy as if they had served me proper notice? So I get the 14 years whether they do a PILON or not?

    This is all really useful stuff, on the offchance that I get any sort of a choice in the matter. I'd hate to go and negotiate myself garden leave (which is not as good from a non-financial perspective) thinking that it would make a positive difference to redundancy pay and JSA when in fact it wouldn't!

    I'm still a bit unclear about the holiday thing. The difference between being them having to pay me for accrued days (and continuing to accrue during notice) vs them being able to assume that it all would have come out in the wash during my notice period and therefore not pay me anything in respect of accrued holidays, is about £5k so it's worth me getting to the bottom of it in advance if I can in case they try to pull a fast one.

    Same goes for whether they have to give me full pay or whether they can calculate on reduced pay because of the salary sacrifice. If they have to continue to put the sacrificed amount into my pension then my pension contributions will be higher than my salary and this messes up my tax position. And obviously if I'm about to be made jobless I'd rather have the cash anyway. I'd like to find out whether there's a rule that covers these situations or whether it's discretionary - and if the latter, who gets to decide, me or them.

    Is there a site or something that spells all this out? Everything I've found online gives a good overview of the basics but isn't much use for actual real scenarios which are never as standard as the ones they tell you about. And I don't want to pay for advice when this is all something that might not even happen.
  • edited 23 June 2014 at 8:08AM
    getmore4lessgetmore4less Forumite
    46.3K Posts
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    Forumite
    edited 23 June 2014 at 8:08AM
    Holiday,


    PILON it is compensation for the lack of notice since they could have had you take any accrued holiday during that period they don't need to compensate for that accrual.


    Garden leave or work then they need to go through the holiday process unless it is already n the contract(some contracts include termination holiday clauses).


    One thing with PILON is it is taxable/NI if in the contract or normal practice or can be paid net if not taxable(not all companies realise this so be careful).


    Redundancy and potentially some of the PILON upto 30k can be tax free.




    How much notice do you need to give to withdraw from the salary sacrifice?


    JSA is taxable so you won't be seeing all of that £71
  • SnakeySnakey Forumite
    1.2K Posts
    It's marketed to us as a flexible benefit scheme and we get to change it once a year in December unless we have a "lifestyle event". So I'm probably stuck with whatever the rules happen to be as I don't think I can do anything to change the current facts. Even if I had a "lifestyle event" and applied today it's after the monthly cut-off and so I wouldn't be able to make any actual changes till July, which will be too late.

    If I had to guess I'd say that if they do me a PILON they'll give me the full cash but if they do it any other way they might insist on paying it into the scheme because it's a benefit. Although I'd rather have the cash, my main concern really is to make sure that they can't avoid it altogether (not give me the cash because they don't have to and not make the contribution because I no longer work there).

    I'll need to check the PILON thing. I suspect our contract is carefully worded in an attempt to make it tax-free, but if there's a "standard practice" rule then that will override that because I think we pay it 100% of the time when we get rid of someone under a redundancy/compromise arrangement (but never when they hand in their notice). Actually I think in the last big round of redundancies they did have at least some people working their notice, because I remember everyone saying how tight it was of the bosses to make them do that. So there may be some greyness that might work in my favour. But I'm going to work on the assumption that it's taxable, and then look into it afterwards and submit a tax return if I need to.

    Feeling better... it's amazing what a difference it makes to be able to "talk" to someone about it and be prepared in advance.
  • getmore4lessgetmore4less Forumite
    46.3K Posts
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    Forumite
    even if the PILON is not taxable they can still pay it net but that can be an issue if it later turns out it should be taxed.


    Check the contract for anything around the "flexible" benefits many have clauses to try to restrict the "salary" for terminations.


    Stat redundancy is capped at 364 so they can make up any rules that pay more than the stat package would give you. use the previous rounds/terminations as guidance.


    if in contact with previous people that have been given settlement agreements it can be handy to use the sale legal as they know the previous packages.
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