Returning to same company after redundancy 10 January 2022 at 3:52PM in Redundancy & redundancy planning 6 replies 883 views

Jam75

Hi 👋 I took voluntary redundancy in November 2020 when my company merged with another. I was paid out in November 2020 for 20 years service. On 1st December 2020 I was asked to temp at the same company for a couple of months in another role/department. This couple of months turned out to he 12 and I finally left 31-12-21.  The job is now available on a permanent basis but I couldn't apply while I was still working temporarily as I'd had no break in service.   Now I've had a break in service can i apply for the role or will there be tax implications? Hope this makes sense it's quite complicated.  I think the company should have terminated my contract after redundancy. I only had a break of 2 days and they just put this as bereavement leave unpaid. 

Grumpy_chap

Jam75 said:

Hi 👋 I took voluntary redundancy in November 2020 when my company merged with another. I was paid out in November 2020 for 20 years service. On 1st December 2020 I was asked to temp at the same company for a couple of months in another role/department. This couple of months turned out to he 12 and I finally left 31-12-21.  The job is now available on a permanent basis but I couldn't apply while I was still working temporarily as I'd had no break in service.   Now I've had a break in service can i apply for the role or will there be tax implications? Hope this makes sense it's quite complicated.  I think the company should have terminated my contract after redundancy. I only had a break of 2 days and they just put this as bereavement leave unpaid. 

Something is not quite right here, especially your comment about 2-days unpaid leave.

There are specific rules about being made redundant and returning to the same business because quite large sums can be received as redundancy pay and not subject to tax.

You say you were made redundant in November 2020 and were asked back as a temp 1st December 2020.  I assume you left Friday 27th November and then re-joined Wednesday 2nd December.  That makes the two days break.

When you re-joined, was that with the company directly or via an Agency?  The comment around unpaid leave suggests direct and may mean that there was no break of service so the tax status of the redundancy pay may need to be confirmed.

However, you've now had a break and termination of service (from 31st December) and if you apply for the job, it will be a few weeks before you actually start.  When you re-commence, you need to be sure that you do not have continuity of service from previous employment (which is counter-intuitive, perhaps, because that means fewer rights for the employee).

This may well as much a question for the taxation boards as an employment question.  You can return after redundancy, but the devil is in the detail (which is a matter of fact) as to whether the redundancy payment was eligible to be tax-exempt and the ongoing continuity of service.

Jam75

Thanks for your response. My redundancy was based on me leaving the company on the 30th November. I was then employed on Thursday 3rd December on a "special project" temporary. I never thought anything of it at the time. They just said it would be easier just to continue my contract, I thought I'd had a 2day break until I looked in the system and it stated unpaid bereavement leave for 1st&2nd. Then the temp contract kept getting extended until I finally left 31st December. I just don't want any tax implications because of it or if I do go back having to pay my redundancy back. I also received 12 week's pay in lieu of notice and then got paid for working. It's all very messed up. 

Grumpy_chap

Jam75 said:

Thanks for your response. My redundancy was based on me leaving the company on the 30th November. I was then employed on Thursday 3rd December on a "special project" temporary. I never thought anything of it at the time. They just said it would be easier just to continue my contract, I thought I'd had a 2day break until I looked in the system and it stated unpaid bereavement leave for 1st&2nd. Then the temp contract kept getting extended until I finally left 31st December. I just don't want any tax implications because of it or if I do go back having to pay my redundancy back. I also received 12 week's pay in lieu of notice and then got paid for working. It's all very messed up. 

This is certainly a complex situation because reality did not transpire as intent expected.  Tax is based on reality, which is a matter of fact.  For that reason, I recommend that you post a thread in the "Cutting Tax" forum as there are contributors there that will be able to give better guidance than I.

You will probably have to ask your employer some questions but it is understandable you don't want to do so prematurely as this may put at risk the payments received in November 2020 linked to the redundancy / leaving employment.  Conversely, on a technicality, you may be entitled to more but I very much doubt that reality will pan out in that way if you raised the matter.

There are quite strict rules about eligibility for redundancy pay and mechanisms by which you can return to the same employer and timescales.  I am not an expert, but it is difficult to see that the 2 days (recorded by the business as unpaid leave) would cut it.

What appears to have happened, with intent and reality inconveniently inter-twined:

• November 2020 - intended that you are made redundant.  You leave the business 30th November and are paid normal salary plus two additional sums:
•  - PILON, accrued leave etc.  This is subject to tax and NI in the normal manner as any payroll.
•  - Redundancy pay.  This is exempt from tax (up to £30k) and the sum paid is calculated based on length of service, 20 years in the OP's case.

• December 2020 - OP returned to employment with the company for a few weeks.  Payroll processed this as extended service, continuity of employment contract as the simplest way to do so.
• OP was paid for this work (over and above PILON which technically covered the same period).
• Reality (matter of fact) is that the OP was not, therefore, redundant on 30th November.
• IF the reality panned out that the OP did leave within a "short" period, then the change of redundancy date is largely immaterial.  There are some technicalities around whether the PILON could have been reduced, but that would be entirely for the employer.  
• Paying the PILON, as it was subject to tax and NI, would not be an issue from a tax perspective - it would be no different to the employer having paid a bonus amount.
• What constitutes a "short" period in relation to the redundancy is difficult to assess - it would have the impact of simply changing the date of the redundancy event.  
• As a lay-man, a "few" weeks would be "short"
• An Accountant may suggest that the event had to happen in the same tax year
• A HR professional may suggest the event has to happen before another anniversary of years service occurs (because that impacts the calculation of the redundancy pay due, particularly relevant if only statutory redundancy was paid)

• 1st December 2021 - the redundancy never happened as the OP is still at the business.
• This probably means that the redundancy payment should not have been made exempt from tax.
• I do not know whether that has to be resolved through payroll, which would mean bringing everything to the attention of the employer.  They may be aware of the error, or may have forgotten, but if they remember likely hoping to just "lose" this in amongst many other transactions.  
• It may be possible that the OP can settle the tax direct with HMRC without informing the employer of the error.  But HMRC may then contact the employer anyway.
• This may be resolved by the next step of reality:

• 31st December 2021 - OP leaves the employer
• This is now the redundancy situation
• It resolves the tax-status of the redundancy payments
• Given that a year has now passed, the OP must have accrued another year continuity of service and, the technicality is that the OP would be entitled to a higher statutory redundancy payment.
• The OP may not wish to raise this if they would lose more than they gain.
• If the OP's employment contract has now been terminated, then that is probably sufficient to resolve all the issues around continuity of service, make the redundancy payment valid, no need to mention the PILON that was made in addition to being paid to work the same period.

Is the above the correct account of what has happened?

If the above is correct, then I would suggest the OP could safely just walk away and nothing to worry about.  Any errors in administering the process were by the employer and not the OP.  If anything, the OP lost one year's worth service in the redundancy calculation.  Pragmatically, that is likely best not mentioned.

• Now, the future.
• The OP is not currently working for the company (or anyone else)
• The OP can apply for a job with the company, but there has to be a "break in service"
• The OP would be happy to have this job and the indications are that the employer would be keen to have the OP take the role.
• The OP has nothing to lose in applying for the role and should check with the employer what the minimum time is that there has to be a break in service to not invalidate the redundancy.  The employer has access to the professional resources to know this information, which the OP does not.  Plus, the employer is the party taking the risk on getting it wrong.
• Apply for the job in January to start 1st Feb (earliest) may be sufficient to achieve the necessary break of service.
• Attached article says it only needs to be a week or two to meet the break in service. 
• https://www.xperthr.co.uk/faq/is-an-employer-obliged-to-wait-a-certain-period-of-time-before-re-employing-an-employee-who-was-dismissed-for-redundancy/87445/ 
• The OP will need a new contract with start date 1st Feb (or whatever it actually is) and no retrospective continuity of service.  It may mean that the terms of employment are different to what the OP had before 

Setting this out like that, and following the thought process to the logical conclusion, I would say:

1. that the OP can happily apply for the new job and start from 1st Feb (possibly sooner, possibly later, it will likely be down to practicalities anyway)
2. no need to raise queries about PILON etc
3. the tax-exempt redundancy payment is resolved, as redundancy did occur, even if times were a bit out
4. possibly a technicality that the OP was entitled to a higher statutory redundancy payment but pragmatically best not to pursue

Another option may be for the OP to return on a consultancy basis via an Agency, but that simply adds complexity and not necessary if he above can be followed.

All the above assumes the OP wants to return (sounds like they do) and has no thoughts of any claim against the employer (sounds like the don't).

None of the above is professional advice and, if the OP requires that, then Solicitor or Accountant should be engaged on a paid basis.  I am simply sharing my lay-man thought processes and do not guarantee to be factually correct in all matters.

One outlier consideration would be if the OP had a final salary (DB) pension with the employer but I am going to assume that was most likely not the case as the types of large organisations offered DB pension would have well defined procedures about returning to the company following redundancy.

Finally, I urge the OP to post on this in the "Cutting Tax" forum as there are contributors there that will be able to give better certainty about the status of the redundancy payment.  Please link this thread as then the readers in that forum can see the discussion above.

Jam75

Thanks so much for this, I appreciate it. I had done 19years and 10 months service when I was made redundant. As my notice was 12 week's they actually paid me 20 years service. 21 years would have been Feb 22 so I'm not missing another year. I'll post on the link thanks once again. 

getmore4less

The main issue here is the contract was never terminated and there was not a valid break in service(1 week Sat-Sat is the min).

That might be able to be unwound(paid back) and a new termination with new redundancy payment.

The interesting one here is the non renewal of the temp contract is a termination, and probably falls foul of not having a valid reason as the job still exists.

When was the last extension as there is still a 12week notice period.

Typically non renewal are often  treated as redundancy and there should be a payout of statutory.

Any previous payment was not a redundancy payment as there was no gap in employment.


There is no time limit on reemployment after redundancy and a weeks gap,  as long as it is genuine redundancy situation that changed you can reemploy.

The simple example is loss of work like a contract then a new one comes up a week or more later.

Many places like to have a gap of at least a month and some go to 3 months to time out ET claims.



could just ignore and hope HMRC don't come calling.


Also worth noting statutory gets capped at 20y service(30 weeks pay) , extra years still add 1/2 week in most cases if under 62

Grumpy_chap

On some technicalities, the correct process has not been followed and there are clear administrative mistakes that have been  made.  These are not of the OP's doing.

Taken in the round, the OP can probably just accept what it is for what it is, that the redundancy happened (whether end Nov 2020 or end Dec 2021) and the acceptable payment of redundancy and PILON was made. 

The OP is currently not working, which creates the clear break in service.

An opportunity has now arisen at the former employer, and the OP is free to apply for that.

Seems best to just carry on and go for it, and not worry too much about the details of past payments and their timing.  Asking too many questions might all just back-fire on the OP, who is reasonably entitled to expect the employer to be knowledgeable and follow correct process.

Good luck, OP, and do let us know how the new role pans out