Mutual Separation Agreement
Discussion
Jasandjules said:
Gargamel said:
A mutual agreement is not redundancy though, so no part of it is tax free.
Also if you have a non compete clause in your contract, make sure it is waived as part of the agreement.
Makes no real difference, you have a Loss of Employment and a payment can be made ex gratia after any PENP... and thus tax free under S401 (IIRC). Also if you have a non compete clause in your contract, make sure it is waived as part of the agreement.
If they offer compensation for loss of office then yes that is usually tax free up to the 30k.
Apologies if I was misleading.
Seem to have it covered most of it, so the only thing I would add is as follows...
You need to be treated as a "Good Leaver" in regards any incentives and benefits.
Annual Bonuses, make sure they give you a prorated amount for the period you worked in the performance period, at target if possible, although some will wait for year-end results and treat you as a target performing individual (this can be negotiated, although some will stick rigidly to the scheme rules, so read those and the treatment for "Good leavers")
Employee Share Save schemes, will be governed by the rules of the scheme so read those if you are part of them. Likewise any Share Based or Long Term incentives you are part of, you need a copy of the rules and read into the "Good Leaver" provisions.
In the PILON period in addition to holiday you'd also be accruing benefits, such as company pension contributions, car allowance, private medical, life insurance etc... make sure you negotiate the value of all your benefits during the PILON period and get them captured into any settlement.
Lastly if you have any voluntary self funded benefits (Salary Sacrifice generally) make sure you are aware how these are treated on exit because they may take a wedge in your last pay cheque for eg. to cover the cost of that £1,000 bike you got on the B2W scheme last month.
You need to be treated as a "Good Leaver" in regards any incentives and benefits.
Annual Bonuses, make sure they give you a prorated amount for the period you worked in the performance period, at target if possible, although some will wait for year-end results and treat you as a target performing individual (this can be negotiated, although some will stick rigidly to the scheme rules, so read those and the treatment for "Good leavers")
Employee Share Save schemes, will be governed by the rules of the scheme so read those if you are part of them. Likewise any Share Based or Long Term incentives you are part of, you need a copy of the rules and read into the "Good Leaver" provisions.
In the PILON period in addition to holiday you'd also be accruing benefits, such as company pension contributions, car allowance, private medical, life insurance etc... make sure you negotiate the value of all your benefits during the PILON period and get them captured into any settlement.
Lastly if you have any voluntary self funded benefits (Salary Sacrifice generally) make sure you are aware how these are treated on exit because they may take a wedge in your last pay cheque for eg. to cover the cost of that £1,000 bike you got on the B2W scheme last month.
TWODs said:
In the PILON period in addition to holiday you'd also be accruing benefits, such as company pension contributions, car allowance, private medical, life insurance etc... make sure you negotiate the value of all your benefits during the PILON period and get them captured into any settlement.
.
Sorry to be anal about this but technically that will be governed by the Contract which MAY say that PILON is salary only (the contracts I draft expressly state this). If it is silent then it is implied that benefits will also be due, but the starting point is the contract..
Jasandjules said:
TWODs said:
In the PILON period in addition to holiday you'd also be accruing benefits, such as company pension contributions, car allowance, private medical, life insurance etc... make sure you negotiate the value of all your benefits during the PILON period and get them captured into any settlement.
.
Sorry to be anal about this but technically that will be governed by the Contract which MAY say that PILON is salary only (the contracts I draft expressly state this). If it is silent then it is implied that benefits will also be due, but the starting point is the contract..
It's actually called a Compromise Agreement or Settlement Agreement. I say this so you can Google it.
You need to check your employment contract alongside. It will detail if you are owed unused holiday etc. It will state your redundancy pay, how much per year etc.
Companies can sack people for no reason if it's due to redundancy.
If they are making more than X people redundant they have to have a consultation period. This gets rather complicated, but it means you will get paid during that time.
You MUST see a solicitor. Any agreement won't be legally binding without. Company should pay for one hour's worth of advice.
I know a fair bit about this. Please feel free to ask me specifics.
You can arrange a specific reference for future employers, as part of the agreement.
You need to check your employment contract alongside. It will detail if you are owed unused holiday etc. It will state your redundancy pay, how much per year etc.
Companies can sack people for no reason if it's due to redundancy.
If they are making more than X people redundant they have to have a consultation period. This gets rather complicated, but it means you will get paid during that time.
You MUST see a solicitor. Any agreement won't be legally binding without. Company should pay for one hour's worth of advice.
I know a fair bit about this. Please feel free to ask me specifics.
You can arrange a specific reference for future employers, as part of the agreement.
Edited by tele_lover on Monday 29th January 13:51
Gargamel said:
A mutual agreement is not redundancy though, so no part of it is tax free.
Also if you have a non compete clause in your contract, make sure it is waived as part of the agreement.
I'm sure this is not correct. Any ex-gratia (non obligatory payment) is tax free up to £30k.Also if you have a non compete clause in your contract, make sure it is waived as part of the agreement.
OP, assuming it's agreed, ask your employer to declare any additional payment (on top of notice pay etc) as "ex-gratia". It means they are not obligated to give you this money. Because they were not obligated, it is tax-free up to £30k.
You can Google ex gratia payments.
Edited by tele_lover on Monday 29th January 14:04
OP you are in a very strong position even if it doesn’t feel like it.
Lots of other great advice in this thread, but under no circumstances take an offer that in anyway compromises your financial situation and ensure you get all the future protections you need.
They are paying you to go away quietly.. make it cost them a lot.
I am guessing you work in tech sales from your description? US based company?
Lots of other great advice in this thread, but under no circumstances take an offer that in anyway compromises your financial situation and ensure you get all the future protections you need.
They are paying you to go away quietly.. make it cost them a lot.
I am guessing you work in tech sales from your description? US based company?
If the package being offered were to exceed the tax free amount you could also ask for some of it to be paid in to your pension as this would be tax-free as long as you do not exceed the annual pension contribution allowance levels -we did that when one of my family left their job by mutual agreement after their employer decided to act in breach of confidence.
OP, if you're not yet lawyered up Tina Attenborough of Attenborough Law is also good I understand
OP, if you're not yet lawyered up Tina Attenborough of Attenborough Law is also good I understand
Hi all, sorry for the radio silence. Progress is that the deal is done and I’m quite happy with it. First offer wasn’t great as expected but I’ve managed to improve it over 400% (and some other bits and bobs) which gives me plenty of time to find something else (and hopefully a bit of time just with my wife and baby as well).
Appreciate all the input and advice; PH is a unique place in my experience for breadth of perspective and I am grateful to be able to call upon it!
Couple of weeks left now and I’ll be out. Looking forward to finding something to get stuck into and reignite me.
Appreciate all the input and advice; PH is a unique place in my experience for breadth of perspective and I am grateful to be able to call upon it!
Couple of weeks left now and I’ll be out. Looking forward to finding something to get stuck into and reignite me.
InformationSuperHighway said:
OP you are in a very strong position even if it doesn’t feel like it.
Lots of other great advice in this thread, but under no circumstances take an offer that in anyway compromises your financial situation and ensure you get all the future protections you need.
They are paying you to go away quietly.. make it cost them a lot.
I am guessing you work in tech sales from your description? US based company?
Thanks. In terms of role, right area, but I’m more of a chief of staff/deputy to the head of sales. It’s a sort of do-it-all type role, so it’s varied but means I don’t immediately fall into a straightforward box when looking at new roles.Lots of other great advice in this thread, but under no circumstances take an offer that in anyway compromises your financial situation and ensure you get all the future protections you need.
They are paying you to go away quietly.. make it cost them a lot.
I am guessing you work in tech sales from your description? US based company?
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