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Jenny, Solicitor
Category: Law
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Experience:  Qualified Solicitor specialising in Employment Law and general legal matters. Please start your question For Jenny Only
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GA-crb I entered into a compromise agreement which stated the followin

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I entered into a compromise agreement which stated the following:
2.1 Without any admission of liability the Employer will pay to the Employee the sum of £59,364 (the Termination Payment) by way of compensation for any prospective claims arising out of the Employee’s employment in relation to which the Employer makes no admissions.
2.2 The Termination Payment is made up as follows:-
2.2.1 £12,301 as payment in lieu of notice which will be subject to deductions for tax and national Insurance (the PILON)
2.2.2 £47,063 as an ex gratia payment which will be paid by the Employer to the Employee without deductions for tax and National Insurance (the Ex Gratia Payment)
2.3 The Employer and the Employee believe that £30,000 of the Ex Gratia Payment will be tax free although the Employer makes no warranties to this effect.
The company are now telling me that only £30k can be paid without deduction which I believe is contrary to clause 2.2.2 above,
Do you think I can enforce this?
Hi Wesley my name is***** am a solicitor and I am happy to help you today, Is there anything in the agreement which states that you are liable in event that a sum above the figure of 30k is taxable?
Customer: replied 1 year ago.
Hi JennyThe indemnity clause is below2.4 The Employee shall indemnify the Employer on a continuing basis in respect of any income tax or employee National Insurance contributions in respect of the Termination Payment (and any related interest, penalties, costs and expenses) (together “Excess Tax”) which is incurred other than as a result of the Employer's default. Provided that the Company will not make any such payments to HM Revenue & Customs before particulars of the proposed payment are given to the Employee and the Employee is given the opportunity at his own expense to dispute any such payments.
Ok Wesley thanks, ***** ***** not think that there is any benefit to you in trying to argue this. The tax position is clear and that is that any payment of compensation on benefits is tax free up to £30k and any payment over and above that is taxable. I agree that the wording of the settlement agreement is unclear however even if you were to argue that it is not taxable at source, HMRC will come after you to recover the sum and it will have to be repaid. You can argue that contractually it should have been paid without deduction if you wish and I think on the wording you will win but you will not actually be any better off as the sum is taxable. Does that make sense? if you have nay further questions please do ask. If I have answered your question I would be grateful if you would take the time to rate my answer, thank you and all the best.
Hello Wesley is there anything further you would like to know?
Customer: replied 1 year ago.
OK understood but if I argued and won would it be enough to cancel the contract
Customer: replied 1 year ago.
From a cashflow point of view it is better for me
No it wouldn't cancel the settlement agreement altogether. If you bring a breach of contract claim it would be for damages arising from the breach so it would not cancel it altogether. I can see it from a cash flow position but be mindful that if the employer inform HMRC you will be liable.
Hi Wesley is there anything further I can clarify for you? If I have answered your question please remember to rate my answer before leaving the site as I am not otherwise paid for working on your question. Thank you and all the best.
Customer: replied 1 year ago.
Can this be kept confidential ie not published as the agreement requires this. Thank you
there is nothing in it which identifies you however I can ask for the question to be closed after you have rated my answer so that no one can see it.
Jenny, Solicitor
Category: Law
Satisfied Customers: 6466
Experience: Qualified Solicitor specialising in Employment Law and general legal matters. Please start your question For Jenny Only
Jenny and other Law Specialists are ready to help you
Thanks Wesley. i've asked for this to be confidential. All the best with it.
We received your customer service inquiry, however, we are unable to respond to you because we do not have your email address. Please contact customer support at***@******.*** and provide us with your email address and a link to this question page so that we can help you.
Thank you, ***** Support Team.