Posted on 24/07/2020 under redundancy, Uncategorized,

Settlement agreement payments are comprised of two parts:

• Contractual payments
• Compensation payments

Contractual payments consist of payments you are due in accordance with the terms of your employment contract. Examples include holiday pay and bonuses. These will be subject to income tax and National Insurance (NI) payments.

The compensatory payment, also known as an ex-gratia payment, is the compensation you will receive to cover the loss of your employment. The first £30,000 of this payment is tax- and NI free.