Voluntary Redundancy, Payment in Lieu and Car Allowance

[Mr Scruff]

My company is downsizing - I've been offered, and accepted, voluntary redundancy. I've been with the company less than 2 years so no statutory payment.

My contract states that the company many choose to pay me in lieu of notice and that's what's happening. However, they've said they're not going to include my car allowance in this.

Are they under any legal obligation to do so?

[Sy1441]

Not sure. I've been in the same situation thought and have received the car allowance.

[ReallyReallyGood]

I am no expert but have been through something similar...

If you are being paid your notice period to leave early, they are effectively breaking your contractual obligation of a notice period, by giving you more money. Assuming you'll have a compromise agreement in place to break your contract, in accepting it you are signing away any contractual obligation your employer has. I expect you could simply not sign it and work your notice if you prefer.

Edit: Just noticed you said it's in your contract that they may pay you in lieu of notice - this creates all sorts of ambiguity to be honest, so the above is probably bks.

[davek_964]

From the govt website on redundancy regarding payment in lieu :

"To do this you must have a payment in lieu of notice clause in your employment contract. If it’s not in your contract and you’re paid in lieu you must receive full basic pay, plus compensation for any benefits you would have got during the notice period."

So unless your contract says they can avoid paying you the car allowance during that period, then they must pay it.

I don't know if the fact that you've been there less than 2 years makes a difference though.

[Mr Scruff]

Hmm, seems a source of ambiguity.

I do have a clause in my contract which says we can be paid in lieu of notice but it doesn't mention anything about car allowance/pension benefits etc.

Also no compromise agreement - I don't leave for another week or so but my boss has already gone and he didn't receive one.

Despite working for a reasonably large multi-national it's all been handled rather badly.

[prout]

I've been through this process a couple of times. First company made many employees redundant and paying just the contractual 4 weeks basic pay (was on commission as well as car allowance, but neither paid). I had a job lined up so didn't push it.

Second time it was just a couple of us - they offered the basic four weeks initially but I ended up getting quite a bit more at their discretion.

In my experience, don't burn your bridges & make an effort for a smooth handover - it may pay in the end.

Also, PILON is taxable, discretion isn't.

[prout]

I've been through this process a couple of times. First company made many employees redundant and paying just the contractual 4 weeks basic pay (was on commission as well as car allowance, but neither paid). I had a job lined up so didn't push it.

Second time it was just a couple of us - they offered the basic four weeks initially but I ended up getting quite a bit more at their discretion.

In my experience, don't burn your bridges & make an effort for a smooth handover - it may pay in the end.

Also, PILON is taxable, discretion isn't.

Edited by prout on Wednesday 18th June 18:48

[Mr Scruff]

Thanks, have also been through this before but had compromise agreements etc last time, this time it's a complete shambles! I'm not burning any bridges, and indeed have stayed on for an additional couple of weeks to assist, but the car allowance is worth a significant amount of money to me.

[FiF]

How we have handled it has been to allow the employee to use their company vehicle until the end of the notice period. Realise that's different to a car allowance but it has cost us nothing effectively, it assists the employee in transitioning and finding another job and it smooths the process.

No doubt someone will come along and saying we are exposing ourselves to all sorts of risks but in practise never been an issue.