HR non-quiche - I need advice please

[callmeovercautious]

Hello all - I will link to the other thread but need some advice by tomorrow so I am starting this to make you pay me some attention

I am not in "mainstream" HR any longer so need some advice for a friend of DPs.

He has been made redundant and does not have to work notice, all seems fair. However he has a 3 month notice period (at least 4 weeks longer than his stat entitlement) he has asked me (if his employers are happy) if they can just pay stat notice and add the rest to his redundancy pay.

Slightly underhand but I know I have dealt with this 8 years ago and we did it. Well I wrote the letters at that stage

So basically he would have an extra 4/6 weeks tax and NI free. He is a 40% tax payer on very good money so it would make a difference to what he gets in his hand. He is unlikely to find work soon.

Would they get found out? I can't imagine how but I need some up to date advice.

[llareggub]

Not sure, to be honest.

I know that this is definitely something that we used to do but no longer do. In the good old days I'm sure we used to tell people that the payment was subject to tax and that it was up the recipient to sort it out...like they would!

However, recently my DH was sent home with a redundancy notice and he was told that he would get pay in lieu of notice and that it would be tax-free.

I haven't helped, really, have I?

[MaryBS]

It all depends on what his contract says, and what his employers say in his letter. It is doable, but it depends on how often they do it, and to how many people. Its worth a go, because if the IR find out, its the employer who is liable...

[Sleepdeprived72]

I think part of the issue here maybe that his employer would not want to roll any of his contractual notice pay into a redundancy number as your friend of DP could then potentially sue them for breach of contract, in addition to getting in hot water with HMRC. If they did, it leaves them exposed for the purpose of bettering their employees tax position. But hey if they are fool enough it's worth having a go. Not sure the employee wouldn't be liable to the HMRC to some extent though if it was found out.

[callmeovercautious]

Good point about breech of contract. Thanks everyone.

llaregrrub - not sure your Dhs place have it right as I always thought notice pay was taxable. No you have not helped - just more confused

[MaryBS]

If its in your contract you get pay in lieu of notice its taxable. If you work your notice its taxable. Otherwise it can be classed as redundancy. Prior to being made redundant, we all had or contracts changed to remove the "pay in lieu of notice". We then got it paid free of tax

[llareggub]

callme, yes, that's why I mentioned it. Luckily DH wasn't selected so it isn't an issue for us.

[callmeovercautious]

MaryBS - yes I think that is what we did many years ago when I last dealt with it.

llareggub - good to hear he was not selected, DP escaped as well this week