Pay in lieu of notice

[private123]

Forgive me if this is at all inappropriate for this forum, but I think it could be classified as both "Accounting" and "Legal".
I will shortly be made redundant as the company I work for is in administration. When I am made redundant I will be entitled to claim 12 weeks pay in lieu of notice from the government, capped at £430 per week, minus Job Seekers Allowance (regardless of whether I claim JSA).
However, if I immediately start a "job" then any earnings will be offset againsr this, and I will effectivly lose this £4k or so. (Why anyone would bust a gut to start looking for a job straight away under these circumstances is beyond me - strange government rule).

Anyway, I hope to start a LTD and start a contract immediately after being made redundant. Is there any legal way I could avoid losing this money. For example if I did not pay myself any salary or dividends for the first 12 weeks ?

Even if this is possible, I wonder where this would leave me with NI as there would be a 12 week gap in my contriubutions. Not sure if that would cause me any problems further down the line.

[northernladuk]

Not signed up to that accountant yet?

[Nixon Williams]

Anyway, I hope to start a LTD and start a contract immediately after being made redundant. Is there any legal way I could avoid losing this money. For example if I did not pay myself any salary or dividends for the first 12 weeks ?

No - even if you take no income from your company, you are in effect working, so you would have to declare this and I guess the benefit would not be paid.

Even if this is possible, I wonder where this would leave me with NI as there would be a 12 week gap in my contriubutions. Not sure if that would cause me any problems further down the line.

NI contributions are looked at on an annual basis, so provided you have contributed enough during the year you will still 'earn' a credit towards your pension.

Alan

[jmo21]

I will be entitled to claim 12 weeks pay in lieu of notice from the government, capped at £430 per week, minus Job Seekers Allowance (regardless of whether I claim JSA).
However, if I immediately start a "job" then any earnings will be offset againsr this, and I will effectivly lose this £4k or so. (Why anyone would bust a gut to start looking for a job straight away under these circumstances is beyond me - strange government rule).

Assuming jobs are easy to come by, then yes, everyone would wait, keep the money, then start a job.

Presumably this is in place to help people when it takes them time to find a job after the shock of redundancy.

So it's up to you to decide, use (abuse?!) the system that is in place, or just get a "job".

[scooby]

Not signed up to that accountant yet?

WHS

[mudskipper]

Forgive me if this is at all inappropriate for this forum, but I think it could be classified as both "Accounting" and "Legal".
I will shortly be made redundant as the company I work for is in administration. When I am made redundant I will be entitled to claim 12 weeks pay in lieu of notice from the government, capped at £430 per week, minus Job Seekers Allowance (regardless of whether I claim JSA).
However, if I immediately start a "job" then any earnings will be offset againsr this, and I will effectivly lose this £4k or so. (Why anyone would bust a gut to start looking for a job straight away under these circumstances is beyond me - strange government rule).

Anyway, I hope to start a LTD and start a contract immediately after being made redundant. Is there any legal way I could avoid losing this money. For example if I did not pay myself any salary or dividends for the first 12 weeks ?

Even if this is possible, I wonder where this would leave me with NI as there would be a 12 week gap in my contriubutions. Not sure if that would cause me any problems further down the line.

PILON shouldn't be dependent on you not taking work. Are you sure it is payment in lieu of notice, and not paid notice where you're not required to work (i.e. garden leave). Never heard of it being reduced by JSA either, although you can't claim JSA during your PILON period -sounds like a weird setup.

[private123]

I may have confused things by calling it pay in lieu of notice or PILON. Perhaps best to call it statutory notice pay. This is paid by the government insolvency service when your employer cannot pay because of insolvency. See here..
http://www.insolvency.gov.uk/pdfs/gu...remployees.pdf

Section 20 says "If you get another job during all or part of this notice period, we have to deduct any wages you earn." and "We have to deduct any state benefits you are entitled to even if you have not claimed that benefit. We also deduct a notional amount for tax, as you would have paid this as tax had you received the notice payment as wages."

So it seems clear that if I earn any wages, or claim JSA, this will be deducted, but I wondered if I could not pay myself for these 12 weeks then there would be no wages to deduct.