When can I start my claim for enhanced redundancy?

[Roger645]

I was made redundant last Friday and I am currently on 12 weeks notice so am on garden leave whilst my notice period runs out. Redundancy payment is statutory minimum and I am going to pursue a claim to to previous enhanced rounds of redundancy being offered. When can I start this process? Do I need to wait till my redundancy payment is made which I am being told is at the end of April or can I start now?

Thanks

Roger

Edited by Roger645 on Tuesday 31st March 08:39

[Roger645]

Thanks for the responses. The company doesn't have a standard redundancy policy and the reason for my thinking regarding the enhanced package is that is has been offered multiple times before and as far as I know this is the first time stand terms have been offered, so I intend to pursue it on the basis of custom and practice.

[Roger645]

Jasandjules said:

Have you an effective date of termination? A termination letter? Does it offer any appeal? If so you need to undertake this process. After that contact ACAS to raise a dispute (this stops the clock for up to 28 days on the claim for which you have three months less one day to lodge the claim).

The termination letter states that my emplyment terminated on the 31st of March and I can appeal on the companies decision to make me redundant on the same day. There is nothing about appealing the package.

Also I am on 12 weeks notice so effectively I terminate at the end of June hence my confusion.

[Roger645]

edc said:

Have you taken any further advice beyond the posts you have made here? I think there is a lot more information to be gleaned to qualify your claim eg numbers affected by current and previous rounds of redundancies, financial health of the company at the time, whether m/any of those were volunteers, whether the caclulation basis has been the same in previous rounds or simply just more than statutory, your understanding/basis for previous calculation methods etc

Thanks for the reply and yes I have had external advice, some from a friend who's a lawyer and also from ACAS. Financial wise the company is a profitable multinational software company and all previous calculations have been the same method, this was confirmed by HR & the MD.

[Roger645]

edc said:

Roger645 said:

Jasandjules said:

Have you an effective date of termination? A termination letter? Does it offer any appeal? If so you need to undertake this process. After that contact ACAS to raise a dispute (this stops the clock for up to 28 days on the claim for which you have three months less one day to lodge the claim).

The termination letter states that my employment terminated on the 31st of March and I can appeal on the companies decision to make me redundant on the same day. There is nothing about appealing the package.

Also I am on 12 weeks notice so effectively I terminate at the end of June hence my confusion.

Follow the correct process as laid out above. Write your complaint to the company and then follow up with ACAS.

You may have 12 weeks notice but based on what you write your employment terminates on 31st March. Whether you are paid out your notice or not is another matter though.

Thanks for your advice, I have written to the company suggesting that the termination date is incorrect as I am on notice due to there being no provision in my contract for payment in lieu of notice. I will also appeal on the basis of the settlement. I have spoke to ACAS and as they instructed I have asked for details why the enhanced package is not being offered this time.

[Roger645]

edc said:

When you write 'settlement' do you meant payment? Or, are you referring to a settlement or compromise agreement?

Sorry, payment. A compromise agreement was offered but based on the terms I chose not to take it.

[Roger645]

davek_964 said:

edc said:

davek_964 said:

I thought the compromise agreement was generally part of an enhanced redundancy package? If you chose not to take that, then I would only expect them to offer statutory minimum.

A compromise agreement does not go hand in hand with an enhanced redundancy payment. I have run several rounds of redundancies across a few companies and have always paid more than statutory minimum. The only times a compromise agreement has been used have been particularly contentious individual cases. Some organisations though like to use a compromise agreement as a matter of course.

And I think our company was a matter-of-course one.

But actually, I didn't really mean that an enhanced redundancy would always be hand in hand with a compromise agreement. What I really meant was that I'm surprised a compromise agreement would be required by the company if the redundancy payment is only statutory minimum.
So the fact that the OP was offered a compromise agreement they refused to accept, and now wants to challenge statutory minimum redundancy left me a bit confused. Because I assumed (perhaps wrongly) that compromise agreements were only used with enhanced packages (even if they are not always needed for enhanced packages) it makes it sound like the OP was offered an enhanced package with a compromise agreement, didn't like the terms and rejected it - and has therefore been paid statutory minimum - which they want to challenge.
I assume I'm wrong, but it would be good for the OP to clarify what redundancy package was offered with the compromise agreement - was it the statutory minimum they've now received? Or something different?

The compromise agreement offered PILON but at basic pay and not including other standard benefits. This was tax free as it was classed as damages as there is no provision for PILON in my contract. The compromise agreement also made me responsible for both parties liabilities should HMRC decide that there was in fact tax to be paid on the damages.

[Roger645]

davek_964 said:

Roger645 said:

The compromise agreement offered PILON but at basic pay and not including other standard benefits. This was tax free as it was classed as damages as there is no provision for PILON in my contract. The compromise agreement also made me responsible for both parties liabilities should HMRC decide that there was in fact tax to be paid on the damages.

OK, but PILON is separate from redundancy pay. So even if they are trying to give PILON instead of worked notice I thought they would still have to offer redundancy on top of that - was that just statutory minimum?

Gov website says you can still be paid PILON even if it's not in your contract, which should be full pay plus compensation for benefits. And my understanding is, PILON is taxable - ours was.

Yes, it was statutory as well as the PILON, but the PILON was basic pay not including benefits as I am now getting on garden leave. The tax free element as I understand it is because it's paid as damages but the tax free allowance is capped at £30k.

[Roger645]

edc said:

PILON is taxable. But, where no notice has been served or paid, there is a breach of contract and the treatment of this payment is different to PILON.

It is standard fare to have such a clause re indemnity in most compromise agreements. Certainly, I have it inserted for those I have worked on. Your adviser or solicitor should be advising you of this though.

Did your clause make the employee indemnify the employer as well?

[Roger645]

edc said:

Roger645 said:

edc said:

PILON is taxable. But, where no notice has been served or paid, there is a breach of contract and the treatment of this payment is different to PILON.

It is standard fare to have such a clause re indemnity in most compromise agreements. Certainly, I have it inserted for those I have worked on. Your adviser or solicitor should be advising you of this though.

Did your clause make the employee indemnify the employer as well?

Yes indeed, as already mentioned. These agreements have been used in redundancy and non-redundancy situations.

OK, I guess it's an individuals choice if they want to accept the risk. This wasn't the only reason I didn't accept the compromise agreement terms but was included in my decision.

[Roger645]

edc said:

Roger645 said:

OK, I guess it's an individuals choice if they want to accept the risk. This wasn't the only reason I didn't accept the compromise agreement terms but was included in my decision.

Whilst the 'risk' might sit with you the Company will 99% of the time in good faith do the work that is necessary to ensure the payment is correct and proper. However, that doesn't stop HMRC wanting to have a look if they want to. Your own adviser/solicitor should be able to talk you through those risks, the way the payments are constructed etc and whilst not making the decision for you, can help to give you some confidence. I have not been in a business or a position where an agreement has been signed without that condition.

Based on the circumstances surrounding my situation and based on what else is in the agreement I am pretty sure that the only interest that the company had was its own mitigation of risks.

If the payment is correct and proper why do the company feel the need to get the employee to indemnify them against any any issue from HMRC, as has been pointed out the company has accountants to ensure that they are not exposed to the risk. Just to be clear, if someone accepts this clause and signs it's nor a case of the risk might sit with the individual, it does 100% sit with the individual.

[Roger645]

edc said:

Roger645 said:

Based on the circumstances surrounding my situation and based on what else is in the agreement I am pretty sure that the only interest that the company had was its own mitigation of risks.

If the payment is correct and proper why do the company feel the need to get the employee to indemnify them against any any issue from HMRC, as has been pointed out the company has accountants to ensure that they are not exposed to the risk. Just to be clear, if someone accepts this clause and signs it's nor a case of the risk might sit with the individual, it does 100% sit with the individual.

I think you are missing my point. Your adviser can assess how risky that risk is, if that makes sense, and advise you accordingly. If their judgement is that the Company are pushing the boundaries of what is or isn't in scope of the relevant section (I think 401 and 403 ITEPA), then the real risk is obviously much higher. As you may know, it is not as simple as as any payment under £30k is payable tax free. As a business you are always going to want that clause in there.

Also, with reference to accountants, this is not really an accounting function. It is more a legal and taxation point, which for most businesses, they will not have that knowledge of internal to their business. I use, external tax lawyers for these things where necessary.

In your case, and as you describe, if it is a genuine redundancy situation and the payment is a simple statutory one, then the real risk is as close to zero as can be. As you have found out though that does not stop the company wanting that clause though!

I think the point, from my point of view as opposed to the companies that this clause and others in the agreement (based on advice) made the agreement unacceptable and therefore I didn't sign it and am pursuing matters via another avenue.