Ducati Sporting Club UK > General > Idle Chat > compromise agreements (redundancy)

[philthy]

Originally posted by final_edition

Redundancy is tax free upto £30k

Mark may have a contract which states that either party has to give three months notice of termination of contract ( i.e. if mark found another job he would have to work three months notice )

If the employer wishes to terminate the contract he can either let you work your notice, or say to you 'You can go home now and we will pay you your wages in advance for the three months, but you don't need to come into work '

Therefore this amount will be classed as wages and be taxable. ( I think )

Redundancy pay will be any payments in addition to this e.g. The equivalent of one weeks wages for every year of service.

Depending on your circumstances you may also be entitled to a tax rebate at a later date.

The above implies no knowledge of any employment law or tax issue and if anyone wants to sue me if it's wrong then don't bother cos all my money is in a tin box buried under a rock on a mountain in Wales. It's a big pointy one with grass at the bottom,trees in the middle and rocky bits at the top.

Phil

[antonye]

Happened to me last year, and I thought the world had ended!

I got sat down in a meeting with my (former) boss and the lady from HR and they said that they'd done a "job matching exercise" and that my skills didn't match anything they had on offer... which was strange because they hired a graduate to do my job once I'd left (some synics would say it was because they only paid them half...)

Basically I got a compromise agreement and went straight to a solicitor. I had a long chat with him and he said that I would have a case for unfair dismissal, but after having just been stabbed in the back I really didn't want my old job back, working for what is now a sinking ship. I didn't want the lengthy court proceedings or tribunals. The money recompense was good enough to see me through 6 months without worry, so I signed it and got on with my life.

The funny thing is that I walked into another job after 4 weeks off (enjoying the sun and watching the cricket!) doing roughly what I did before, with a 25% payrise working for a better company with nicer people and less hassle all round. I work in San Francisco for one month in 3, and I'm really enjoying it!

The moral is that things happen for a reason and I reckon that in 3 months time you'll look back on this as a positive life changing experience.

Good luck!

[Paul James]

Originally posted by final_edition

Redundancy is tax free upto £30k

Currently looking at a similar issue with my partner who is being retured due to ill health, she was injured while at work.

There are instances where tax is payable on redundancy even below the £30k limit. Typical balls up in the legislation but what do you expect it is England under labour after all.

Apparently it all depends on whether the way redundancy is paid out is described in your contract or "terms and conditions" of employment. If it clearly states that tax is payable then you are up against it. If not then you shouldn't be paying tax.

[twpd]

Pay in lieu of notice is not redundancy payment. It is pay. Simple as that. However, if it is pay as compensation for inconvenience that is somewhat different and not subject to tax. Such a payment might occur if they wanted him offsite immediately or terminated the contract but, wouldn't let him work for a competitor for reasons on intellectual knowledge. AIUI.

Originally posted by weeksy2
the deal being offered although not the best scenario ever obviously does look and sound like a good deal mate.

3 months pay after an 18 month contract isn't bad at all. Confused why your are to be taxed on it though, i was under the impression all redundancy pay was tax free.

I'm still praying for it at my place

[dave996]

Were you a contractor or full time staff?

I don't think a company has to pay you redundancy if you have worked for them for less that two years and then it is something stupid like £200 for every year you have worked for them, anything more is up to them.

I got made redundant about 4 years ago, I was paid about £5K which included my final months salary and I was taxed on a percentage of it.

Good luck anyway Mark, it's a horrible feeling but I'm sure it will work out for you.

Dave

PS If you're a telecoms engineer and know about microwave radios, I might be able to help

[allthegearnoidea]

Dear Mark

I have more experience of this subject than is healthy. I have executed compromise agreements with many staff and had a couple executed against me.

There are a lot of excellent points on this post and you should make your solicitor aware of them.

Be aware that in order for the compromise to be legally binding your employer is obliged (subject to certain limits) to pay for you to see a solicitor.

At risk of being repetitive do not sign anything until your solicitor is happy.

The way in which your compromise agreement is structured could save you a lot of tax.

If you are not totally sure about things once you have seen your solicitor email me your phone number and I would be very happy to talk it through with you.

Kind Regards and Good Luck

Dave