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Ex Gratia Payments

A settlement agreement normally includes a payment made by the employer to the employee. A termination payment is sometimes also known as a compensation payment, severance payment (particularly in the US) or an "ex-gratia" payment.

Contractual payments must be made subject to usual deductions for tax and national insurance. Whereas a genuine ex-gratia payments are not made for work that has been undertaken or for a provision of services or under a contract of employment and are essentially compensation for loss of employment or a “gift” by the employer. Consequently they can be paid free of tax up to £30,000 pursuant to section 403 of the Income Tax (Earnings and Pensions) Act 2003.

News

MAC Call For Evidence

The Migration Advisory Committee (MAC) has been commissioned by the UK Government to assess the range at which salary thresholds should be set for sponsored migrants in the context of the future post-Brexit immigration system, due to be launched in 2021. In addition the committee has been asked to provide evidence based recommendations on how…

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Students

New Graduate Route For International Students

The Government has announced that a new 2-year post study work visa for international students will be launched next year. The new “Graduate” route will be open to all international students who have valid UK immigration status as a student and have completed a course of study in any subject at undergraduate level or above…

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MAC To Review Australian Points Based System

The new Home Secretary, Priti Patel, has written to the Migration Advisory Committee (MAC) and instructed its members to add three more questions to their current review of salary levels for skilled workers in the context of Tier 2 sponsorship. The previous Home Secretary, Sajid Javid, commissioned this piece work in June 2019 and the…

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