COT3 breach

Sanofian

Hi all,

I was offered a settlement following a case of constructive dismissal, the terms were set out in a mutually signed COT3 agreement, the payment was offered tax free.

Although the company paid the full amount they declared a portion of it as earnings to HMRC meaning my tax free allowance took a significant hit.

I tried going through employment tribunal enforcement but they're not interested.

Where do I go from here?

TIA

Savvy_Sue

How much was the payment? Did it exceed the amount which can be paid tax free? If it did, then a portion would indeed be subject to tax ...

Marcon

Sanofian said:

Hi all,

I was offered a settlement following a case of constructive dismissal, the terms were set out in a mutually signed COT3 agreement, the payment was offered tax free.

Although the company paid the full amount they declared a portion of it as earnings to HMRC meaning my tax free allowance took a significant hit.

I tried going through employment tribunal enforcement but they're not interested.

Where do I go from here?

TIA

What exactly was offered tax free - i.e. what were the various component parts of the payment?

Sanofian

£12k free of tax

Jillanddy

Companies are required to report payments to HMRC. The company does not determine what is taxable and what isn't. HMRC do. As this is a COT3, the wording must have been determined by ACAS? Because of a range of changes in taxation of termination and settlement payments, most agreements these days state that the liability for tax/ additional tax arising from the payment lies with the person receiving it. 

Technically the company have complied. They did make a tax free payment. That isn't the same thing as tax not being liable. 

I doubt you will get anyone to enforce your interpretation of the terms. If there is an error, it is either with ACAS, or with the way HMRC have viewed the tax liability.

Sanofian

The actual wording...

The company are saying they needed to pay me 3 weeks notice period as payment in lieu of notice, even though I served my contractual 4 weeks. That's why the additional earnings were reported.

I have written confirmation my notice period was 4 weeks, no idea where they got 7 weeks from.

68ComebackSpecial

Sanofian said:

The actual wording...

The company are saying they needed to pay me 3 weeks notice period as payment in lieu of notice, even though I served my contractual 4 weeks. That's why the additional earnings were reported.

I have written confirmation my notice period was 4 weeks, no idea where they got 7 weeks from.

How long were you employed there? Though the notice you had to give was 4 weeks, if you were employed for longer than 4 years the notice your employer was required to give you increased by 1 week for each additional year of service, up to a maximum of 12 weeks. So, if you were employed for seven years it would be correct that an additional 3 weeks of notice would be required.

Undervalued

Sanofian said:

The actual wording...

The company are saying they needed to pay me 3 weeks notice period as payment in lieu of notice, even though I served my contractual 4 weeks. That's why the additional earnings were reported.

I have written confirmation my notice period was 4 weeks, no idea where they got 7 weeks from.

How long had you been employed in total?

The employer is obliged to give you a minimum of one week's notice of each complete year of service up to a maximum of 12. It is not the same as the contractual notice you have to give them if you wish to resign. The two periods do not have to be equal.

Sanofian

I was there 7 years.

I had HR confirm my notice period before I resigned.

Lomast

That's your answer then your notice period was 4 weeks but theirs was 7 weeks due to length of service

Sanofian

So even though I was asked to serve 4 weeks notice, confirmed by HR.

By law I was required to serve 7?

Bizarre, why didn't they tell me 7?

Thanks for your advice.