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redundency information
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My Husband has been told today that he is being made redundant along with one of his colleages. He has worked for the company for 9 years & he's been told that he will recieve a letter in the post on Monday (the start of a weeks holiday) he seems to think that he is getting 11 weeks notice .Does that mean that he works normally for 11 weeks & is paid as normal every last Friday of the month ,or does it mean that he finishes now & gets 11 weeks money as his redundency money.or is he due for more than that as he has been with the company for 9 years. we're confused ...
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Worrying times, I know- but rather than speculating now you might be better just waiting until the letter comes on Monday as this will hopefully set out the terms. He should get:
- pay for remaining weeks to cover notice period or pay in lieu of notice based on contractual notice period;
- any redundancy pay
Notice period
11 weeks' notice seems an unusual figure for a notice period- it's normally a month / 4weeks or 3 months. So maybe 11 weeks is the redundancy entitlement. Regardless of redundancy pay, he'll be paid his notice (in addition to any redundancy), and the employer will decide how much of the period he needs to work. My guess is they'll ask him to work to the end but take any remaining holidays before he finishes
redundancy pay
This could be the firm's scheme based on length of service, or statutory redundancy pay
- pay for remaining weeks to cover notice period or pay in lieu of notice based on contractual notice period;
- any redundancy pay
Notice period
11 weeks' notice seems an unusual figure for a notice period- it's normally a month / 4weeks or 3 months. So maybe 11 weeks is the redundancy entitlement. Regardless of redundancy pay, he'll be paid his notice (in addition to any redundancy), and the employer will decide how much of the period he needs to work. My guess is they'll ask him to work to the end but take any remaining holidays before he finishes
redundancy pay
This could be the firm's scheme based on length of service, or statutory redundancy pay
Factor - if buggybelle's hubby has been there over 9 complete years, his notice period is 9 weeks - but more if his contract states longer. Otherwise I agree with your good answer.
Buggybelle - it is in your husband's interest to receive money in lieu of notice - not work out his notice period. He probably will not have much choice about it, however. The reason is that money in lieu of notice is compensation for loss of office and is NOT deductible for tax and NI. Working out the notice treats him as being employed normally, so tax and NI apply. Redundancy payments occur in addition - and are tax free up to �30k.
Buggybelle - it is in your husband's interest to receive money in lieu of notice - not work out his notice period. He probably will not have much choice about it, however. The reason is that money in lieu of notice is compensation for loss of office and is NOT deductible for tax and NI. Working out the notice treats him as being employed normally, so tax and NI apply. Redundancy payments occur in addition - and are tax free up to �30k.
Sorry, buildersmate but, assuming that it's an entitlement of the employment contratc, pay in lieu of notice is definitely not the same as compensation for loss of office and is certainly taxable and liable to NIC deductions. And compensation may be taxable if the employer is obliged to pay it under the contract or even if it's just customary.
OK. I accept I shouldn't have used the term 'compensation for loss of office'. That is something else.
But I'm afraid pay in lieu of notice is definitely not taxable or subject to NI, unless it is specified within the contract (which is the point you make about CFLOF), or unless it goes over �30k including a redudancy payment.
We'll call that 15 All shall we?
But I'm afraid pay in lieu of notice is definitely not taxable or subject to NI, unless it is specified within the contract (which is the point you make about CFLOF), or unless it goes over �30k including a redudancy payment.
We'll call that 15 All shall we?
I'm afraid it's 30 love, buildersmate; read my answer again. "assuming that it's an entitlement of the employment contract, pay in lieu of notice is ... taxable and liable to NIC deductions." http://www.hmrc.gov.uk/manuals/eimanual/EIM128 50.htm
Below is the quote from the relevant Government website. I don't believe we are at odds when there IS a clause in an employment contract. I'm merely reflecting that I've never put such a clause in a contract and have always been able to offer an employee this (i.e. avoidance of some tax/NI) as a carrot to go early. There seem to be 2 players on your side of the net now - that's not on.
Is your notice pay taxable?
If you work your notice, you'll be taxed at the usual rate on the money you earn in your notice period. PILON is only taxable if it's been provided for in your contract or is customary. Otherwise, it is not taxable unless the PILON together with redundancy and other compensation adds up to more than �30,000, in which case the excess over �30,000 is taxable at the usual rate.
Is your notice pay taxable?
If you work your notice, you'll be taxed at the usual rate on the money you earn in your notice period. PILON is only taxable if it's been provided for in your contract or is customary. Otherwise, it is not taxable unless the PILON together with redundancy and other compensation adds up to more than �30,000, in which case the excess over �30,000 is taxable at the usual rate.
I'm confused by this. If there is no notice period specified in the contract then can any payment be conisederd as 'pay in lieu of notice'.
Surely there is scope for jiggerypokery here.
When I was made redundant I worked my 3 months contractual notice period (for which I was paid and taxed ) and then got redundancy pay. Maybe I should have agreed for PILON (thereby getting the notice pay NI/tax free) and then 'volunteered' to turn up at work the last 3 months without pay- so the company saves on employers' NI, and I save tax and NI.
Surely there is scope for jiggerypokery here.
When I was made redundant I worked my 3 months contractual notice period (for which I was paid and taxed ) and then got redundancy pay. Maybe I should have agreed for PILON (thereby getting the notice pay NI/tax free) and then 'volunteered' to turn up at work the last 3 months without pay- so the company saves on employers' NI, and I save tax and NI.
"PILON is only taxable if it's been provided for in your contract or is customary."
Surely as it's a legal right it's always customary? Am I missing something here? There is a proscribed notice period protection in law regardless of the specific contract is there not?
I've seen many many people receive PILON over the years and never have any of them been untaxed. I've also seen people paid off early from short term fixed contracts (footballers mainly) who were therefore given Compensation for Loss of Office instead and got it tax free.
I'm not saying you are wrong bm and I'm not an expert on payroll but I have worked with people who are supposed to be and never heard any suggestion that PILON was ever untaxable before now.
Surely as it's a legal right it's always customary? Am I missing something here? There is a proscribed notice period protection in law regardless of the specific contract is there not?
I've seen many many people receive PILON over the years and never have any of them been untaxed. I've also seen people paid off early from short term fixed contracts (footballers mainly) who were therefore given Compensation for Loss of Office instead and got it tax free.
I'm not saying you are wrong bm and I'm not an expert on payroll but I have worked with people who are supposed to be and never heard any suggestion that PILON was ever untaxable before now.
I don't know what website buildersmate is quoting but the extract he gives is misleading at best.
"If you work your notice, you'll be taxed at the usual rate on the money you earn in your notice period." - In fact, the whole point is that, even if you don't actually work your notice period, money paid to you for that period is payment arising from the employment (and therefore taxable under Section 62 ITEPA 2003) rather than arising from the termination of taht employment and therfore taxable under Section 401.
"If you work your notice, you'll be taxed at the usual rate on the money you earn in your notice period." - In fact, the whole point is that, even if you don't actually work your notice period, money paid to you for that period is payment arising from the employment (and therefore taxable under Section 62 ITEPA 2003) rather than arising from the termination of taht employment and therfore taxable under Section 401.
PILON is a complicated area. Generally it is taxable but there are circumstances where the first �30000 (including any severance payment )won't be taxable. See here for an example:
http://www.osborneclarke.com/publications/tax/ Taxation%20of%20termination%20payments/7062.as p
I'm not going to try to interpret it but I suspect Buildersmate and Tombraider are both right depending on the circumstances
http://www.osborneclarke.com/publications/tax/ Taxation%20of%20termination%20payments/7062.as p
I'm not going to try to interpret it but I suspect Buildersmate and Tombraider are both right depending on the circumstances
the short answer is wait for the letter as iot could be either
If he is given notice he has to work and pay tax and at the end he will get his redundancy money
if he is given pay in lieu of notice he will be free to take another job at once .. his pay in lieu will be tax free .. he can get help from Jobcentre plus at once but will not get jobseekers for some time
NB if the latter he may have to wait 11 weeks to claim on any insurance that protects the mortgage
why 11 weeks ?
again wait but my guess is 9 weeks notice and 2 weeks holiday
all of this is contractual
on top at the end of the 11 weeks he is entitled to redundancy pay tax free (up to a limit 30k I think)
for youngsters its 0.5 weeks per year
then from (21 or 18) a week per year
then from (40 ??) 1.5 weeks per year
if they are being tight there is an earnings limit of around �230 per week
if its contractual it may be no earnings limit and may be more weeks
If he is given notice he has to work and pay tax and at the end he will get his redundancy money
if he is given pay in lieu of notice he will be free to take another job at once .. his pay in lieu will be tax free .. he can get help from Jobcentre plus at once but will not get jobseekers for some time
NB if the latter he may have to wait 11 weeks to claim on any insurance that protects the mortgage
why 11 weeks ?
again wait but my guess is 9 weeks notice and 2 weeks holiday
all of this is contractual
on top at the end of the 11 weeks he is entitled to redundancy pay tax free (up to a limit 30k I think)
for youngsters its 0.5 weeks per year
then from (21 or 18) a week per year
then from (40 ??) 1.5 weeks per year
if they are being tight there is an earnings limit of around �230 per week
if its contractual it may be no earnings limit and may be more weeks
What I think some of you are missing is that PILON is not pay. It is compensation for breach of the employment contract by the employer (the breach occurring because the employer has not given the required amount of notice - in this example , as bm says, if 9 complete years have been worked then statutory notice is 9 weeks regardless of any lesser amount in the contract).
So if entitlement to PILON is not stated in the employment contract it cannot be subject to tax & NI in the same way as pay is. It is therefore tax & NI free unless the �30K comes into it.
So if entitlement to PILON is not stated in the employment contract it cannot be subject to tax & NI in the same way as pay is. It is therefore tax & NI free unless the �30K comes into it.
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