To think she’s lying? Or do companies really do this?

[BlazingSunsh]

A friend I have got closer to over recent months told me that she fell out with her employer, a law firm, and was paid 70k if she agreed to leave without further fuss. She was on 90k at the time. The dispute was over her workload/what she had been given and how she felt she had been blocked to progress. The company disagreed but wanted her to leave so apparently offered this? I find this totally unbelievable?! 70k with no tax? Do these things happen?! If so I want to try it as that’s basically two years of my entire income after tax!

Yes, of course they do. Compromise agreements are very common.

That amount will be taxed. I may be wrong now but it used to be that the tax free limit was 30k (or thereabouts). I live elsewhere and got 30k (taxed!!) booo. But yes very normal.

@EmeraldIsla for 70k…? 🤔

@SilverBranchGoldenPears you got 30k?!? Why don’t people try this more often then, these are huge sums

Yep. My employer just paid out 90k to the HR Director to get rid of her.

They aren't tax free. Settlement agreements are taxed as usual wages.

What do you mean you want to try it? Settlements that high are usually because the company has been doing something very wrong and would rather settle than be on the receiving end of an employment tribunal. They don't go handing out money willy nilly.

That's not a huge amount given she was on 90k. She's not going to be willing to leave for a month's salary is she.

Entirely possible, although only 30k would be tax free if it works the same as redundancy.

Yes they do, bear in mind she probably had 3 months notice, or so, in her contract so some of the 70k will cover that, and annual leave entitlement. And the rest a payment to go away quietly.

I know a few people who have negotiated deals like this. All high earners in professional roles.

@Hectorscalling what on earth

Someone tell me what fuss I have to make to get one of these 😂

It's tax free to the recipient, not because tax is not due but because the employer as part of the agreement undertakes to satisfy all tax liabilities of the payout.

Yes of course it happens, although the amount is taxed as income.

Its usually proportional to salary and of the order of 3months plus payment in lieu of notice, but can easily go up to a years pay.

Can be a lot more if the company knows they are doing something wrong. Eg I got a small fortune when they paid me off for getting pregnant.

Plenty in my company been paid a lot more than that!

@FriendlyNeighbourhoodAccountant well my friend has no real basis to complain, it was very much embellished and she admitted that as it was going on!

They do, a years salary is common I think. I know my own employer has done this, and know a colleague who recently has got £50k from her employer.
It makes it easier in some cases to get rid of people without risking them trying to go to tribunal ( whether they have a case or not) and having to pay legal fees and a drawn out process.

Yup.

Usually when someone has been discriminated against and they want them to go quietly.

She could be on gardening leave, which means she’s unable to work for anyone else for 3-6 months

@DrFoxtrot didnt think of it like that, suppose that makes more sense

My DP was given a "golden goodbye" to leave his last job, also under the condition he did not take them to tribunal. He was on about £30k.

It also sometimes happen that the company are in the right but do not want to spend time and money fighting something, even if they might win. Kicking up a fuss to try to get a pay out will end up with you getting a reputation in the industry, people aren't stupid.

Yes I know people this has happened to.

I worked in accounts for a London media company in the late 1990s. They paid £36k to someone as a “golden hello” when they poached them from another agency, on top of their £120k salary, and then when they realised they didn’t like them they paid them £85k lump sum to get rid of them 6 months later! 😳. I was on £14.5k as an accounts assistant and remember thinking what huge sums of money it all was.

Consider that whatever the rights and wrongs of the issue, the person is leaving suddenly without having secured another job to go to.
That can look strange to future employers. Plus there may be whispered rumours from the ex colleagues, even if just based on the suddenness of leaving (more so if any details are leaked).
All potentially awkward and off-putting to potential other employers in the same industry.
So the money is partially for that risk - of finding it harder to get another job fast.

It means nothing when you’re watching it dwindle every month…..secure income every time for me!