P45 but no payment

[mad4amanda]

Evening all,
Asking on behalf of a family member.Their employment has been terminated with a weeks notice which is to be paid.
No problem with this apart from the reason for termination is that the employer can no longer afford to pay them and they have been issued with a P45 but no payment.
It was very rushed they were taken into a meeting at 4pm without any warning and told they were being let go , under 2 years service (just) so no chance to bring to tribunal even though they have failed to follow any process of consultation and so on ,they were never told they were at risk .
So the question is is it legal to issue a P45 without making payment especially as the P45 includes the amount not paid , surely the P45 is a declaration to HMRC and as such should be correct with payments made if not it is fraudulently issued?
Obviously we have concerns that the individual may not get paid the monies due especially as the reasons given for termination.
The sum is substantial to them and will cause hardship if withheld so I would like to advise them of the position and process they need to follow.
If it is not paid should a report be made to HMRC as the P45 has been issued incorrectly can they use this as leverage to get paid ASAP .
Every P45 I have ever had has been issued at the point of payment not in advance and the ACAS site does not appear to cover this scenario.
I have advised them to contact their union as they will be able to help but thought there may well be a payroll expert on here that would know?
Thanks
Steve

[martinbiz]

Have they been officially made redundant, or just laid off through lack of work. A lot will depend on the basis they were employed on. They need to look at their contract if they have one.

Not sure how they will pay them a weeks notice, when in their own words 'they can't afford to pay them'. Have they consulted the CAB or ACAS

You need to get your family member to post themselves it would be lot easier to offer advice.

[mad4amanda]

They have a contract which states that until 2 years service they are entitled to a weeks notice , their role is not redundant and is still required and someone else will be covering their role presumably at a cheaper rate.
That is not the issue , the issue is that the P45 was completed prior to the meeting and reflects the notice pay and money owed since last month but payment has not been made.

Edited by mad4amanda on Friday 9th March 20:02

Edited by mad4amanda on Friday 9th March 20:04

[martinbiz]

Ok, so have they actually approached the employer yet to ask why no money has been paid? That is the first move.

[mad4amanda]

No to be fair they were in a state of shock given a letter and the p45 and did not check that the payment was there it was when I asked them that they said there was no cheque or payment.
The business is now closed for the weekend and they would like to know the process to follow.
So do you know If this scenario is correct or not ?
You may have guessed I have some good experience of HR practice including restructures and associated redundancies on a daily basis, including going through the process personally. However payroll processing is something that has always been dealt with centrally for me so it is not an area I am familiar with and this is why I seek advice from someone who has direct experience of this ?

[martinbiz]

How are they normally paid, Cheque, bank transfer...? Have they checked the bank to see if any payment has been made?

I don't think you can progress this any further without speaking to the employer on Monday, there is probably a good chance that everything is above board and ok, well apart from losing their job of course.

[mad4amanda]

used to be BACS but switched to cheque last month due to "issues" with the accounts .
As I say we would like to know if they business is in the wrong by issuing a P45 without payment before Monday so we know how to approach it . The P45 is dated today so from today they are no longer employed , and therefore should have been paid?

[martinbiz]

As said above, but their are no hard and fast rules, many companies will only run a monthly payroll, especially if it is outsourced, any final payments made including notice payments, holiday pay etc can be made up until the normal pay date, so you could be dismissed on say the 7th of the month and not receive your final payment until the 25th.

Were they monthly or weekly paid? if monthly it is not correct to only offer a weeks notice period after nearly 2 years, the employee may only have to give a week notice to leave up to 2 years, but not the other way round. The contract really does need to be looked at, bearing in mind that an employer can write what they like in contract but it still has to be fair and reasonable and comply with the law or it is not worth the paper it is written on.

There really is not much they can do until Monday

[Red Devil]

martinbiz said:

As said above, but their are no hard and fast rules, many companies will only run a monthly payroll, especially if it is outsourced, any final payments made including notice payments, holiday pay etc can be made up until the normal pay date, so you could be dismissed on say the 7th of the month and not receive your final payment until the 25th.

That's just an administrative cop out. In a previous life I was in charge of a payroll department and dealt with this issue many times. If the cumulative P45 figures are known it follows, as night does day, that the final amount to be paid will be too. Where all payments are made by cheque, as appears to be the case here, there is only one plausible excuse for not issuing one with the P45: unavailability of signatories. If the time frame involved with the employee's departure is very short this is a possibility.

There are specific HMRC rules about issuing a P45 though. See here - https://www.whatdotheyknow.com/request/107338/resp...

mad4amanda said:

the employer can no longer afford to pay them

mad4amanda said:

used to be BACS but switched to cheque last month due to "issues" with the accounts

I would be getting on to this first thing on Monday, especially if there are any doubts about the company's financial situation.

[martinbiz]

Red Devil said:

martinbiz said:

As said above, but their are no hard and fast rules, many companies will only run a monthly payroll, especially if it is outsourced, any final payments made including notice payments, holiday pay etc can be made up until the normal pay date, so you could be dismissed on say the 7th of the month and not receive your final payment until the 25th.

That's just an administrative cop out. In a previous life I was in charge of a payroll department and dealt with this issue many times. If the cumulative P45 figures are known it follows, as night does day, that the final amount to be paid will be too. Where all payments are made by cheque, as appears to be the case here, there is only one plausible excuse for not issuing one with the P45: unavailability of signatories. If the time frame involved with the employee's departure is very short this is a possibility.

There are specific HMRC rules about issuing a P45 though. See here - https://www.whatdotheyknow.com/request/107338/resp...

mad4amanda said:

the employer can no longer afford to pay them

mad4amanda said:

used to be BACS but switched to cheque last month due to "issues" with the accounts

I would be getting on to this first thing on Monday, especially if there are any doubts about the company's financial situation.

I agree, which is why I said it earlier.

Not sure what FOI link has got to do with the OP's situation, he's been given one, the question is about payment, which can be anytime upto and including the normal pay date, as can the issue of the P45 hence my query about the notice period, it is somewhat suspect for a company to provide only 1 week in lieu for a monthly paid employee who has nearly 2 years service. Anyway it's all somewhat speculative guesswork without knowing more about the OP's situation.

Oh.......and I do this every day in a present life

[BertBert]

Red Devil said:

There are specific HMRC rules about issuing a P45 though. See here - https://www.whatdotheyknow.com/request/107338/resp...

But that is not the question. The P45 has been issued, the question is of payment.

To the question: In my experience, the companies I have run have not been that bothered to time a final payment to the exact departure date. The payment is usually as part of a regular payroll. There is no disbenefit to the employee thus so. These are companies of circa 200 employees that have a small HR function with external 'legal' HR help that take seriously getting employment matters right.

However the employer cannot create a p45 and not pay the employee, without getting in to trouble unless they cease to trade.

So the family member should take some heart in this unless the (ex) employer is known to behave in a cavalier fashion. My advice like the others on here is to ask the company when the money is to be paid which will almost certainly be in the next payroll. However if they go bust before that point, there will be issues.

Bert

[Red Devil]

BertBert said:

Red Devil said:

There are specific HMRC rules about issuing a P45 though. See here - https://www.whatdotheyknow.com/request/107338/resp...

But that is not the question. The P45 has been issued, the question is of payment.

I know that, but the rules are relevant to this case. See the answer to Q2.

HMRC would generally consider it unreasonable if the P45 was not completed and sent to HMRC/provided to the former employee immediately after tax and any other deductions are calculated for the ex-employees final pay period

Accordingly, to know the figures to put on the P45 the necessary calculations must have been done.
IOW a 'payroll run' for that indvidual. To suggest that the final net pay figure is not known is facile. (see below)

BertBert said:

To the question: In my experience, the companies I have run have not been that bothered to time a final payment to the exact departure date. The payment is usually as part of a regular payroll. There is no disbenefit to the employee thus so. These are companies of circa 200 employees that have a small HR function with external 'legal' HR help that take seriously getting employment matters right.

I still maintain that delaying payment to the 'regular payroll' date is an adminstratively convenient excuse.
Given the additional fact that the company had recently changed to making payments by cheque a delay is even less tenable.

BertBert said:

However the employer cannot create a p45 and not pay the employee, without getting in to trouble unless they cease to trade.

Quite. So having created one in accordance with HMRC requirements, why not write the cheque the same day?

BertBert said:

So the family member should take some heart in this unless the (ex) employer is known to behave in a cavalier fashion. My advice like the others on here is to ask the company when the money is to be paid which will almost certainly be in the next payroll. However if they go bust before that point, there will be issues.

to most of that. Only the OP's family member will know whether there are grounds for concern about the company's ethics or any rumours about its financial stability.
.

[mad4amanda]

Hi guys thank you for your comments and guidance , there are concerns about both the stability and ethics of the company .

Edited by mad4amanda on Saturday 10th March 20:00

[QBee]

Only one comment (which may be covered above). If their length of service, when including any untaken holiday and notice period, exceeds two years, then they are entitled to two weeks notice - government statutory minimum.

[havoc]

QBee said:

Only one comment (which may be covered above). If their length of service, when including any untaken holiday and notice period, exceeds two years, then they are entitled to two weeks notice - government statutory minimum.

Pretty much what I was about to post - if the above takes them over the 2-year threshold then:-
- They're entitled to more notice (and pay);
- ...and MUCH more importantly, they've more rights with regard to termination of contract, especially if the role itself isn't redundant (note: the work may not be redundant but due to a reshuffle the role may still be redundant...although if other people are taking on the work then there's a process the employer should have followed but in this instance probably hasn't).


So worth calculating exactly how close the dismissal is (or rather, the day after, which is when notice actually starts) to the 2-year anniversary...

[mad4amanda]

Hi Guys 3 months short still of the 2 years and contract states up to 2 years 1 weeks notice, no process of consultation or being placed at risk both formal processes I have followed in the past but as I understand it the only grounds are: gender, race, sexual orientation or religious discrimination?
Lets see what tomorrow brings!

[BertBert]

Hope it goes well. Sounds like a bit of a dubious employer, but provided they stay in business, your family member should hopefully get paid ok!
Bert