Compromise Agreements Tax Implications

By Fiona E Martin

Job Vacancy Indonesia, Employee, Vacancy   

Compromise Agreements are legally binding agreements between an employer and an employee, sometimes referred to as a termination settlement. They allow for a clean break of the employment relationship where the employee waives their right to bring claims in return for compensation.

The first £30,000 of compensation is generally tax free. However, this is not the case with every Compromise Agreement. How much of a payment is taxable depends on the basis on which it is paid. So if you are giving or receiving compensation in a Compromise Agreement it pays to look at ways to make it as tax efficient as possible. Here are some of the options.

Salary and benefits to date
All payments made up to the point the contract of employment ends are subject to normal tax and national insurance deductions.

Payment in lieu of holiday
Payments in lieu of holiday are taxable.

Pay in lieu of notice
Where such payments are allowed for in the employee's contract of employment or employee handbook they are taxable. Where they are not, they may be paid gross and count towards the £30,000 exemption.

However, where an employer routinely makes payments in lieu of notice - even if it is not part of the employment contract - HM Revenue & Customs may consider tax should be deducted.

Payments for restrictive covenants and confidentiality obligations
An employer may restrict an employee from acting in competition, or approaching customers or employees after they leave. If the contract contains enforceable restrictive covenants, the employer can rely on these if it has not breached the contract when terminating the employment.

However, if the contract does not have these provisions, or they are unenforceable, the employer can seek new restrictions. To make these binding in law a "consideration" must be paid - usually a small sum of £100-£200. This is taxable and liable to national insurance contributions. The same applies to payments associated with a confidentiality clause.

Compensatory and ex-gratia payments
The first £30,000 of compensatory, ex gratia (non-contractual) payments for loss of office or employment is tax exempt.

Redundancy Compromise Agreement
Statutory and contractual redundancy payments fall within the £30,000 exemption.

Pension contributions
Direct payments into a pension scheme are not taxable unless they exceed annual and lifetime contribution allowances.

Outplacement costs
Contributions to the cost of outplacement counselling or training are not taxable. Usually paid directly by the employer, they do not count towards the £30,000 exemption.

Legal costs
The employer usually pays the employee's legal costs. This does not count towards the £30,000 exemption as long as the fees are solely in connection with termination of employment.

Sums exceeding the £30,000 exemption
If the Compromise Agreement compensation exceeds the £30,000 exemption, tax is deducted at basic rate on the additional amount.

Do You Want a Standout Resume?

By Edward Turilli

Job Vacancy Indonesia, Employee, Vacancy 

What is considered an effective resume?

An effective resume is a hard copy or an electronic document whose primary purpose is to win the approval of a potential hiring manager who has considered you a job candidate qualified to compete for a position opening. Your resume must be planned and presented in a way to clearly persuade a job recruiter to further investigate your stated and strongly implied potential strengths, related industry experience, proven value, training, education, abilities, potential growth, and best return on investment for the company. This credential should immediately indicate what you can offer an employer through highlighted qualitative and quantitative performance evidence, rather than promises that lack solid and convincing substantiation.

Your honesty in creating this personal document is highly important for, if selected for interviewing, you will likely be judged by total strangers as to the content of your resume against your actual interview performance and appearance. Therefore, your resume must bear a close "resemblance" to you when you are interviewed in person.

To be effective, your resume must be written in the most appropriate format for your total experiences, especially your work history. Choosing the best format is crucial and should be carefully designed by a certified professional resume writer to produce a powerful credential. The three most prominent resume formats are chronological, functional, and the combination, or hybrid, the chronological format being the most used and liked by human resources people for the ease of following applicants' work history and professional focus and development. This format also highlights any breaks, or gaps, in the chronology of employment, sometimes raising a "red flag."

When gaps in employment occur - especially for explainable and legitimate reasons - use the functional format which emphasizes accomplishments in employment rather than indicating when you worked. If you are changing your career or are returning to civilian employment from government work, use the functional or the hybrid format to emphasize your ability to transfer learned skills, accomplishments, leadership, and rigorous training to move into the employment of the profit or non-profit arena. In addition, retired, injured, downsized, and older workers returning to employment may elect to choose the functional or hybrid model.

"Ten Commandments" on Preparing Your Resume

1. Individualize yourself. Since many hiring managers review more than a hundred paper or electronic resumes a day, your resume will have to fit the required, or ideal, position's profile to stand out from most others under review. Does your resume stress unique qualities in your overall value, leadership, and achievements? Challenge the reader to invite you for a face-to-face meeting by aggressively marketing your individual resolve and potential value to the firm while verbally bidding for personal recognition as a standout applicant among the competition.

2. Focus on and quantify your specific accomplishments. Show (do not just tell) what you have achieved in your past employments to increase revenues or improve an organization's effectiveness. For example, "Led innovative research in XYZ project development that resulted in generating $250,000 in new billings in the first six months," or "Spearheaded a manufacturing cost reduction project that saved the division 15% in overall production costs." Use key words to emphasize your specific individual accomplishments in numerical terms to indicate your value, or return on investment. Hirers may scan your resume for industry-related key words. Key word lists for each occupation / job are located in many publications in libraries, stores, and online.

3. Use positive, proactive language. Confidently and credibly promote your attributes. For example, "Ably assisted in saving ABC Company $55,000 during the first 12 months through improved sales training techniques." Rather than just a dull employment history, your resume should reflect a positive show of ambition and pride in your achievements with detailed proof of personal and job related accomplishments. Quantify your contributions with solid evidence and prove your leadership ability in providing planned project strategies and guiding their implementation to reach positive results.

4. Always be honest and truthful. Avoid lies, half-truths, and exaggerations on your resume and cover letter. You can often reverse or "soften" a known or obvious career related weakness if challenged in an interview by admitting that you learned much from this experience which has taught you a good lesson. If you have wide gaps in your employment chronology, write your resume in a functional or in a hybrid format. Accentuate the positive; eliminate the negative!

5. Present a powerful, impressive resume. Recruiters prefer well crafted resumes, for they are impressed by candidates' show of diligence and a high level work ethic in introducing themselves with care. Use only clear, easy-to-read fonts, and avoid overuse of italics, underscores, and bold lettering. Paper resumes must be printed on top quality 24 to 28 lb. white, off-white, ivory, or light gray resume stock, with matching cover letters and envelopes. Use a variety of appropriate action verbs written in the active voice and interweave powerful modifiers. Avoid repetition, and be consistent and brief throughout.

6. Target your resume. Your employment objective may be stated atop the page or, for more impressive attraction, simply bolded without a heading. Examples: "IT manager / Business Process Manager" or "Motivated, highly experienced professional seeks a position as company representative in Pharmaceutical Sales." Your cover letter will indicate a specific job title in reference to your job application. Follow this with a powerful "Profile" of your professional highlights and related skills.

7. Examine other resumes in guiding the assembly of your own document. Locate top level examples in nationally published resume compilations found in book stores, libraries, and the Internet. Software applications can be helpful, but beware of resume templates, for they tend to be generic, pre-spaced, sparse, and unrelated to one's particular needs. Ask a trusted person to react in honest judgment to your completed resume, for your resume is your "occupational fingerprint," a personal credential that should distinguish your unique qualifications from competing candidates.

8. Proofread carefully throughout. Avoid errors in spelling, grammar, English usage, and mechanics. Be consistent in your application of spacing, punctuation, bulleting, and other physical aspects. Be aware that the level of precision and perfection of your resume will likely be a determining factor in a hiring manager's selection of interview finalists for a position. Have another "pair of eyes" read it over and offer objective criticism.

9. See yourself through the reviewer's eyes. Since hiring managers retain ideal candidate profiles for positions to be filled, job candidates ought to "reverse roles," placing themselves in the reviewer's position. Determine what key skills, experiences, achievements, and other criteria that a hiring manager will seek in the ideal candidate. Research as much as you can to locate those company needs to fill the position you seek. Discover the cultural climate, average employee experience, and company working conditions. This vital "breaking and entering" technique may give you an advantage as the hirer cuts through the clutter of hopeful job candidates' resumes in search of suitable employees.

10. Perceive your resume as an opening tool to gain personal contact in an interview. Soon after mailing your resume or submitting one electronically, send a brief follow-up letter or note to the hirer to punctuate and reestablish your keen interest and proactive nature in gaining an interview and ultimately winning the open position of employment. Your resume should deploy confident, high energy language to convince a hirer that you are determined to succeed in a career with this company or organization. Remember, submitting a standout resume can open doors of opportunity along a lighted path of career success. Don't be locked out in the dark!

Winning Resumes

By Mel Otero

Job Vacancy Indonesia, Employee, Vacancy 

One key to a winning resume is defining your career goal. Without a clear career goal, it is impossible to prepare a targeted resume. Assess your interests, skills, education, strengths and work experience. Be sure this assessment is honest and accurate. Write this down and begin the process of organizing your thoughts. You need to focus on the career you really want. As you set your goals and get focused, a sense of confidence will occur. You will have a clear picture of what you want to do and you will be ready for the next step. If your interests, skills, education and work experience fall into more than one career category, you will need more than one resume. Each resume will focus on your skills, education and experience that appeal to an employer for that specific career position. At this first stage of launching a job search, organization is vital. Create a folder for your goal list, thoughts, ideas, copies of the resumes and the cover letters.

Your first decision in writing the resume is whether to use a chronological format or functional format. In general, the chronological format is preferred by employers. However, if you are seeking a career position in a new field, the functional format will allow you to focus on skills, education and accomplishments that can be transferred to the open position. If you select the functional format, it is to your advantage to create a "combined format". The combined format emphasizes the transferable skills, education and accomplishments but includes an accurate chronological work history. You can find sample resumes on the Internet or purchase one of the resume writer software packages. The importance of the resume cannot be overstated. It is worth the investment of time and money to arm yourself with the best tools to assist you in creating an excellent resume.
Keep in mind that no matter what career you pursue, the resume is your first opportunity to sell yourself. Research has determined that a resume is initially reviewed for 10-30 seconds. In other words, you have 10-30 seconds to grab the attention of the reader. Use job titles and skills headings as an effective tool to get the reader's attention. If the job titles or skills headings are unrelated to the open position, the resume will most likely be tossed. Remember that in the current economy, the employer may receive hundreds, if not thousands, of resumes for a single position. To expedite the initial review process, employers will discard resumes that do not appear related to the open position. The final resume should be letter perfect. It should be printed on good quality white bond paper, not on fancy parchment paper. Be sure the resume is not too long or too short; it is suggested that one or two pages is appropriate. After the resume is in final form and before you send it to anyone, read it aloud and then have someone else proof read it. There is only one opportunity for a first review of your resume. You need to convince the prospective employer within those first few seconds that you have the ability to solve company problems. You are the solution!

Mel Otero, author, has worked in management in the mortgage banking industry and title insurance industry for over 25 years. She has started web sites and written articles to provide information, resources and inspiration during this difficult economy. She has also been mystery shopping part time for over five years.