legal expenses in connection with redundancy

legal expenses in connection with redundancy

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I'm sure the answer is no but are there any circumstances when legal expenses can be deducted from a PILON when paid by the employee themselves

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By Selaen
24th Oct 2016 10:54

If you're paying just the statutory redundancy, no deduction can be made as it's not considered "wages". If you are however making payments above that, you could technically deduct these, but ensure that you do have the correct contracts in place to avoid any dispute.

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By Portia Nina Levin
24th Oct 2016 11:27

Why has the employee paid the expenses themself? Are the circumstances not such that the employer is obliged to pay or reimburse them?

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By nick farrow
24th Oct 2016 11:45

thanks S & PNL - if he had been a client of mine at the time I would have suggested that as part of the settlement the legal fees were paid by the employer - however they only contributed £1,000 leaving the individual to pay the rest

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Replying to nick farrow:
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By Selaen
24th Oct 2016 12:06

£1k to go through the settlement agreement? Ooft! That seems... Excessive. As a yardstick; I went through redundancy in one of the most expensive cities in the UK, had a settlement agreement, disputed it, had 4 months of negotiations and the bill came to £1.3, of which I paid 800.

Why are the solicitors charging the company? Surely the settlement agreement states the amount that the company pays up until, the solicitor invoices that to the client, payable by the company and then invoices the client separately for their part of the costs; that to me would be the standard practice?

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By Portia Nina Levin
24th Oct 2016 12:27

Well, anything that the employee pays is not deductible from earnings, as it is not an expense of the employment.

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By nick farrow
24th Oct 2016 12:33

there was some dispute over the redundancy so client landed up having to pay £6k including VAT legal bill - I can't see how that can be tax deductible for my client - If as part of a compromise agreement the employer had agreed to cover his costs then it may have been tax deductible for the employer and no taxable benefit for the employee/leaver/my client

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By nick farrow
24th Oct 2016 12:36

thanks Portia your comment crossed with mine but confirms my understanding

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By Portia Nina Levin
24th Oct 2016 12:50

Egg-sactly!

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