A partner of your accountancy firm has requested you to preparedetailed notes on the impact of redundancy pay. During this briefmeeting with you, the partner said the following, “When theemployment ofan employee ends prematurely (i.e. before reaching theretirement age or by resignation ofthe employee), it is calledtermination of the employment. Ordinarily this type of terminationis initiated by the employer, therefore, breaching the employmentcontract between themselves and the employee. As a result,employers usually offer the employee some benefits at the time oftermination to settle the breach of employment contract.”
The partner required you prepare a note that discusses thetaxation of various benefits provided to the employees when theiremployment contract is terminated. Specifically, the followingbenefits must be separately discussed among any other benefits thatyou may come across in your research.
?Gardening leave
?Payment for training and skill development of employee
?Past due salary & bonus
?Pay in lieu of unutilised holidays
?Payment in lieu of notice (PILON)
?Statutory redundancy pay up to £30,000
?Statutory redundancy pay above £30,000T
he discussion should also include how to determine whetherbenefits are being paid as ‘services rendered under employment’ or‘as compensation for breach of the employment contract’.
References to the relevant sections of the legislation (section62 & sections 401-416 ITEPA 2003) will enable you to securehigher marks.
REQUIRED:Present your detailed notes in a report format.
Your summary shouldbe detailed enough to be a basis for thepartner to explain the matter to his clients. It may containexamples if that will improve the clarity of your report
