As you know when you terminate employment or if they resign any payment which you currently make to them is taxable, for example bonuses’ holiday pay and payments in lieu of notice. However redundancy pay, or any ‘ex-gracia (voluntary) payment’ can be made tax free. On 1 January 2012, this will change, all payments made due to the termination of employment will be subject to tax if in excess of £50,000, this applies to all redundancy payments, whether contractual or statutory, as well as any voluntary payments, i.e. ex-gracia payments.
It should be noted that the current cap on any statutory redundancy payment is £650 per week. Therefore unless you provide a higher than statutory provision for redundancy pay in your employment documents, an employee would have to have worked for over 76 years to have been paid in excess of £50,000!
The proposition brought by Deputy Bob Hill in June 2011, to allow employees to bring anyone they want with them to a disciplinary or grievance hearing was rejected in the states, and the Employment Forum have been asked to consider the proposition and make recommendations to the States of Jersey, we will aim to keep you updated on this in future newsletters.