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!

Part of her complaint was that her progress was blocked.

The company may have actually done that. And if thetes any hint they did taht eb ause she was a woman, it makes sense to pay her off. Usually a bigger pay out is when the company isn't certain they did everything correctly and that a tribunal would be costly for them.

She may say it's embellished. But she doesn't know what conversations or other things have happened, that she doesn't know about. They may believe she could claim sex discrimination and so paid her off. Since there's a lot of sexist behaviour in the corporate world, wouldn't surprise me if they thought she might win.

I want to point out that my last post was not aimed at anyone legitimately taking a company to tribunal!

We had someone take us to tribunal and we won, we paid them the necessary notice and leave payments and they bragged locally about the 'payout' they'd been awarded!

Sorry about using my personal experience to cloud my posts in this way!

Yes did this with someone on my team. She went on long term sick leave just as she was about to be fired so it was cheaper to get her to agree to go with a golden handshake then to fire her on sick leave and risk tribunal/ continue to pay her sick pay

Once you are sufficiently senior, you just don't walk with nothing. Compromise agreements are pretty standard, even expected. Often get to keep their shares too so paid out under share plans several years after leaving!

The other thing to think about though, is future employment.

I know someone who did this. And could get another law firm to take her on.

We had someone do this although less money. He was threatening people at work but we couldn't prove any of it then saying he was being discriminated against. Really pissed me off because tribunals are there to protect those who need it, not to give poor performers a payout when they get found out.

Yes it happens all the time, I handled a dozen of these agreements last year but not for that amount. Only the first 30k is tax free though.

I left a job in 2012 for one year’s salary and my legal fees paid.

The first £30000 of your lump sum is tax free.

My company put me on garden leave for 3 months so I paid tax on 3 months salary, they also gave me a further 4 months salary as a lump sum, approx £25000. So entirely possible your friend had that lump sum.

You can have two employers simultaneously. You just have to pay tax on everything you earn in the second one.

Wait till you find out that in big tech companies some people are hired without the company even having or intending to ever have a job for them, they pay them a salary and get them on the books purely because they don't want a competitor to have them. They do no work and get paid to be at home doing whatever they like.

You understand you then have NO JOB? You can't live off that amount of money for long and you also forgo bonuses and pension contributions. So nobody wants to actually put themselves out of a job.

It's called a settlement agreement.

It's usually cheaper and less hassle than performance management and a disciplinary process. And no risk of a tribunal at the end.

Those I've been involved with usually pay out about 6 months salary plus notice.

Tax must be paid on notice pay and an compensation over £30k.

Taxed over £30k but equally she shouldn't be discussing it with anyone! Settlement agreement usually involve non disclosure clause. Very unwise of your friend - company could go after her for the money back, compensation re reputational damage.

In my company the payment is one year salary, plus paid for the amount of the notice period plus any accrued leave. So on a 70k salary 90k is about right.
But only the first 30k is tax free

Yes, happened to dh. He had to agree not to go to an employment tribunal which would have found in his favour but by that point had had enough so took the money. It was taxed though.

I wouldn’t be going anywhere for less than 6m salary - 12m if I’d got dirt on my employer.

We paid nearly £500k to our head of legal to get her out. To this day I'd love to know what she had on the company

I had one of these, luckily for me I'd been running the payroll for years so I knew the value of previous 'compromise agreements'. I was supposedly made redundant but walked away with three years salary, the first £30k was tax-free but the rest was taxable.

This happened to a friend of mine, also a lawyer. Raised a complaint of discrimination (he was leader of the company’s LGBT society). Paid off a decent amount, but his name was mud in the industry for a few months and it took him nearly a year to find another position. Not all sunshine and roses when you’re dealing with the rich and powerful unfortunately.

Yes it’s quite common. Though I think as PPs say over 30k and it’s taxed - same as redundancy

I’m an employment lawyer and I deal with Settlement Agreements daily.

The lowest few were for £1. The highest was £600k, which involved getting pre clearance from HMRC for most of the money to be paid tax free.

But generally speaking, 6 months net is a common amount. 70k wouldn’t be tax free and the company must have had some legal liability to go that high.

Very common in the City and Law firms. In the City it’s not uncommon to get well over 12 months salary and some gardening leave and an agreed reference.

Mind you people in the City would normally hire a lawyer to negotiate for them then get the firm to play the legal fees too.

Yes this does happen in law firms.

The flip side is if the person doesn’t take the compromise offer, and doesn’t have enough dirt on the company, they will find themselves on a PIP and end up leaving with next to nothing.