Redundancy

[davethebunny]

Probably been asked before but:

We have been informed yesterday that about 10% are being considered for redundancy.

The timetable is pretty quick.

Consultations today/tomorrow

Selection monday, notification tuesday.

Third consult on 30/09

4th Consult on 06/10 and out the door 07/10.

They've said that there will be no working the notice period.

There's no PILON clause in the contract.

So, is the months notice and the redundancy payment not taxed?

Cheers

[LC23]

Hi Dave

Purely from a tax and NIC point of view and not getting into the legal implications of the redundacy process, the PILON and redundancy will be free from PAYE and NIC under what people know as the "£30,000 limit". Unless the Company has a history of making PILON payments or there is something in a staff handbook or other document that states they have the option of paying PILON instead of making you work this notice period. If the PILON is purely discretionary then should be OK.

Edited by LC23 on Thursday 23 September 15:24

[edc]

PILON should be subject to usual deductions as it is contractual salary. The fact that there is no entitlement for the company to pay PILON is another question. You could push it and seek some sort of remedy but the outcome might hardly be worth the pain.

[shirt]

as above, PILON attracts the usual deductions. also worth noting you're still technically under contract and can be recalled. i was recalled for 2 days to oversee the install on a job i'd designed. v.v. cheeky!

Edited by shirt on Thursday 23 September 15:44

[edc]

shirt said:

as above, PILON attracts the usual deductions. also worth noting you're still technically under contract and can be recalled. i was recalled for 2 days to oversee the install on a job i'd designed. v.v. cheeky!

Edited by shirt on Thursday 23 September 15:44

Sounds more like you were on paid leave. If you were genuinely paid in lieu then typically your contract is ended. Or you were paid in lieu but were given a leave date in the future.

[LC23]

A PILON is not the same as being on garden leave and the above is incorrect. If it is a genuine PILON payment (ie, they are paying you off rather than you working your notice/being on garden leave) and there is no contractual/other written entitlement then it can form part of the "£30,000".

[shirt]

in my case yes, i was given a leaving date 3 months in the future and was given the option to work it or stay at home and still get paid. really tough choice that was.

[LC23]

shirt said:

in my case yes, i was given a leaving date 3 months in the future and was given the option to work it or stay at home and still get paid. really tough choice that was.

Then you weren't paid in lieu of notice. You worked your notice period (albeit they put you on garden leave) and were paid your salary.

[davethebunny]

i had the paperwork through.

I was off sick on the Wed when they were announced and they kindly posted it to my home, even though it means i only just got the paperwork tonight and had the consultation first thing thursday.

There is a page that has a redundancy calculation on it, this notes the £30k exemption, however i can't tell if this would include the notice payment. I can't see how you'd get anywhere £30k just off stat redundancy pay. So does that mean they will include the notice pay?

FWIW this is a FTSE100 co with about 40k employees so i can't imagine they'd get it wrong

[Who me ?]

First post -"approx 10% being made redundant" .Then "approx 40k employees " ( = 4000 redundancies)- isn't there a statutory requirement for a 90 day consultation period on this many ?

[LC23]

davethebunny said:

i had the paperwork through.

I was off sick on the Wed when they were announced and they kindly posted it to my home, even though it means i only just got the paperwork tonight and had the consultation first thing thursday.

There is a page that has a redundancy calculation on it, this notes the £30k exemption, however i can't tell if this would include the notice payment. I can't see how you'd get anywhere £30k just off stat redundancy pay. So does that mean they will include the notice pay?

FWIW this is a FTSE100 co with about 40k employees so i can't imagine they'd get it wrong

Don't bet on it. It is amazing how many companies get the tax and NIC side of redundancy wrong just because they do not obtain the correct advice at the time. Ask your employer what they will pay you tax and NIC free and whether this will include the PILON. Also ask them whether they are obtaining clearance from HMRC on the redundancy programme to provide assurance to both parties that what is being done is correct. You will likely have a tax indemnity clause in your agreement which will put any underpaid tax and employee NIC obligation back on to you if they do get it wrong.

Edited by LC23 on Saturday 25th September 08:48

[MilnerR]

[quote=Who me ?]First post -"approx 10% being made redundant" .Then "approx 40k employees " ( = 4000 redundancies)- isn't there a statutory requirement for a 90 day consultation period on this many ?

[/quote]

I work for a company about twice the size of this who started redundancies back in feb and the consultation in some countries is still ongoing, yours seems very quick. My wife got made redundant from said company, they informed her of the decision and then went through a months consultation designed to allow time for displacement to another role or for her to appeal. She then got 3 months notice with time off for job searching, they also offered career advice and cv/interview workshops. The first 30k of her redundancy was tax free, after that it was taxed at whatever rate she was up to based on earnings accrued that year.

[Chilli]

[quote=Who me ?]First post -"approx 10% being made redundant" .Then "approx 40k employees " ( = 4000 redundancies)- isn't there a statutory requirement for a 90 day consultation period on this many ?

[/quote]

Sounds about right. However, the company can cut this short if they have the agreement of those affected. We opted for this and got paid the difference.
When I was made redundant the first 30 was tax free, and the notice period was taxed as normal.

[davethebunny]

sorry, wasn't very clear.

Our office is shedding 10%.

Not 10% of 40000, might have been something in the news if that was the case!