Redundancy & Mortgage

d3liberate

Hi All,
Following on from my recent couple of threads on being made redundant and looking to secure a mortgage, I thought I would start a new thread with specific questions and advice I need. Please don't shoot me down, these are just thoughts running through my head as to how I can get out of this sticky situation.

In summary, two weeks ago my employment was terminated without notice after 9.5 years with the company. I was offered PILON (9 weeks + holiday + pay to termination date). I was also offered a severance payment of £25,000 to sign a settlement agreement.

After 2 weeks of negotiation, I have verbally agreed to increase the severance payment to £50,000 which I understand is subject to tax over 30k so I won't receive all of it.

The reason for the termination was given as performance and an upcoming redundancy, My contract says they can terminate without notice if they offer PILON and if my performance compromises the business (it doesn't specify gross misconduct).

I haven't signed the settlement yet, the paperwork is still in the process so there are still options.

The company have clearly indicated that this is the maximum level they can go too and in terms of financials, I am happy with the settlement figure and they have agreed to call it redundancy, rather than dismissal.

But now I find myself in a sticky situation. I want to buy a property, and have a mortgage agreed in principle which would be invalidated by my redundancy and scrambling together all the cash I can from family and savings, still leaves me 50k short of buying the property outright.

My question is, as part of my settlement, can I ask my employer to reinstate me because the reason for the immediate termination cannot be justified by them and then they can choose to make my position redundant in say 3 months (or sooner) if they feel it is still appropriate or relocate me to another position within the business.

I can then take out my mortgage a though nothing has happened, and once that is all sorted, they can do whatever they want with me (keep me, fire me or make my position redundant) and give me a pre-agreed severance payment.

Or perhaps I could have been on an extended unpaid holiday from my "termination date" and then when I eventually return to work in say a month or two, they offer me a redundancy? While i'm on my holiday, I can sort out my mortgage and property search.

Does either of these options work, and stay this side of the law? Or other suggestions.

Legally my solicitor has posed an option for reinstatement based on unfair dismissal but I never thought it could be a positive option, until now.

getmore4less

Mortgage fraud

TadleyBaggie

OP wasn't getting the answers he wanted on the loans board so came here:https://forums.moneysavingexpert.com/discussion/5297262

d3liberate

Is it really mortgage fraud? Thats why I asked the question!

I was dismissed unfairly, I can get reinstated back to work. What happens after that, who knows? I could leave, they could fire me again, they could make be redundant or I could spend the rest of my career with the company.

Its happened to a couple of other people at the office, they were let go, only to resurface again a few weeks later and several years later they are still with the business.

xHannahx

If you signed a settlement there may be terms that you can not claim unfair dismissal.

What you suggest is failing to declare relevant information to an application so would be false representation aka fraud.

getmore4less

Ask your mortgage lenders what they think.

Wallhart

I dont get this.

Your going to tell the company who has offered enhanced redundancy to take you on because it was unfair? Make them potentially have to pay additional legal costs and then expect the same package.

You being employed costs a lot more to them than the salary you get paid.
Plus if you have already agreed and signed to the severance package I'm not sure where that would legally put you anyway.

I would imagine those people who resurfaced were employed again because the company realised they needed them again. I've seen that a lot. Could be wrong on the above of course.

Ps if you are only 50k short to buy outright then depending on the house value you should have a lot of equity and a low LTV. A lot less risky propersition for the mortgage lender. Best bet is to talk to one.

If they give you bad news then reconsider your approach

d3liberate

Firstly I haven't signed the settlement, i've just agreed a figure in principle verbally so nothing has been agreed.

Secondly I do understand the costs to keep my employed are much higher than what I earn ( employer NIC, pension, benefits etc) but if I agree the settlement, they would have to pay me for approximately 12 months of what it would cost them to keep me employed. So taking me back on, even for 12 months would actually be a benefit to them, because they get 12 months work out of me which is effectively free.

Its a large company, with offices all over the world and I could potentially relocate to one of several countries without a problem (I have nothing to tie me down to the UK).

The question is whether they would WANT to take me back. My feeling is that they thought I would just accept the initial settlement and move on, but having had some post-termination meetings with them, it seems as though they have regrets and realised what they did was wrong, hence agreeing to my revised settlement figure without much effort on my part.

I have a LTV of 20% but regardless of how low this is, I don't think any mortgage lender will give me 50,000 without the security of a job. I will ask the questions though.

My primary question is that if I manage to negotiate myself back into employment, do I have to notify a mortgage lender of a 'change in employment circumstances'???

I liken this to getting a divorce. If my 'wife' and I have a big fight and she storms out of the house saying I hate you and I want a divorce, but them comes back after 3 weeks and we get back together, its like nothing has happened.

If i'm employed back on the same salary and contract terms, then i'm technically no more at risk than I was before all of this happened. I can still leave or they could still fire me and make me redundant.

I just don't want further problems down the line. If for example I take out mortgage protection and then they make me redundant in say 3 months or even 12 months, and they do some investigating and see that there is a temporary blip in my employment history just prior to getting a mortgage and read into this that its a potential fraud case, that I worked with my employer to get reinstated, with a verbal agreement that they would make me redundant at a fixed date further down the line, so I can get my mortgage paid for 12 months while I am 'looking for work'.

getmore4less

If you unwind the position back to where you were just an employee with no conditions then you will be OK.

That would be the equivalent of being at risk of redundancy and not being chosen.

ANY conditions that change the potential term of the employment like promise to keep you for a year(effectively a fixed term contract) would need to be notified on the application.

d3liberate

Ok i'm seriously considering re-instatement, but I want to understand the costs before I approach the business. If it financially makes sense, I am confident they will be open to the suggestion.

My employment was terminated on 20th July 2015. My package was £60,000, plus private medical, plus 5% employer pension contribution.

I received PILON of circa £15,000 for payment upto termination date, accrued unused holidays and 9 weeks pay), plus a settlement offer of circa £50,000, so my net benefit if I don't return is around £55,000 which is 16 months net pay.

In terms of the company, it costs them around £75,000 to keep me employed for 12 months plus other misc costs.

If they reinstate me, I forego my settlement package and my PILON, but what happens to the period between termination date and reinstatement? Do they pay me for that, or do I take that as unpaid leave?

I can then work there for say 12 months, earning £42,000 net and then decide to leave. It would cost the company £10k more than if we settle, and I will lose £13k cash plus a year of freedom on what I would have got, but i'll be able to get a mortgage and i'll get my 5% pension contributions, plus private medical so my real cash loss would be £10k.

Effectively they get a highly experienced guy, for £4.25 per hour for a year, legally (£10,000 / 2350 hours worked in a year).

My risk is next month they fire me, and don't offer me a settlement. I lose £50,000 and have to have to walk out of the office again with a box and I will still be £50k short on getting my property :rotfl:

Scorpio33

When you apply for a mortgage, they are basically trying to understand what your future income and expenses will be so that they can understand if you can afford it or not.


Even if you suspect that you may be made redundant, you need to tell your bank that you will be getting your mortgage from. If you suspect redundancy, there is a chance your income will be reduced, which will impact on your affordability of the mortgage. Withholding that information from your mortgage provider is basically committing mortgage fraud, as you are withholding information that will most likely impact on the lenders decision to provide you with a mortgage.


In your case, you think it is likely that in the future your income will drop. It is YOUR responsibility to disclose this to your mortgage provider. Even if you are working and not under notice, you know that it is likely you will not be working there much longer, so you need to tell your mortgage provider that fact. Not doing so could invalidate your mortgage.




EDIT: In practice, all the mortgage lenders need is the mortgage paid monthly. So as long as the mortgage is still paid monthly, they will be none the wiser. Not strictly the "correct" thing to do of course.