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back to article Payroll glitch at DXC leaves former staff in employment limbo

Computer Sciences Corp and HP Enterprise Services were old hands at making redundancies, so you'd expect the newly formed entity DXC Technology would also be well versed. Yet some former staff have been left in employment limbo due to a payroll cock-up. That prompted one former UK staffer to quip: "CSC/DXC can't make people …

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  1. flibble

    So whilst this sounds like a disorganised clusterf*ck, based on my understanding the P45 situation and tax situation sound correct. It's perfectly legal to issue a P45 before all redundancy payments are made, and any payments made after the P45 is issued must be taxed on the emergency tax code (0T). The employer MUST NOT issue more than one P45, and the timing the P45 should be issued with depends on when the employment legally ends (which again, may well be before all payments are made).

    The employee can reclaim any overpaid tax (due to the 0T code) from HMRC.

    I'd suggest the affected people get advice from ACAS.

    8 0 Reply
    1. Steve Cox
      Reply Icon

      This isn't right. The P45 was issued this tax year, showing money paid this tax year, however the effective date of the p45 is 04/04 last tax year

      0 0 Reply
      1. flibble
        Reply Icon

        I don't remember that being mentioned in the article - is there more details somewhere?

        I think this is where it gets complicated, and goes slightly beyond what I've experienced (as a business owner that has to deal with all this paperwork from the other side).

        It's not that unusual for a P45 to be issued in a different tax year to the leaving date; it's the leaving date that's important rather than the issue date. (Issue date is at the lower right of Part 1A, the leaving date is in box 4.)

        Is there any discrepancy between when the pay was *due* and when it was paid? It sounds like (given the leaving date was March 31 according to the elreg article) the payments may have been due then, so should (probably) be taxed when they were due, ie. the previous tax year, regardless of when they were actually received by the ex-employee.

        In theory some of this should be less of a problem now that historically, as RTI means information is sent to HMRC in real time. In practice I'm not sure it's actually playing out like that.

        1 0 Reply
        1. Anonymous Coward
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          Anonymous Coward

          If you are paid after April 6th the tax liability is lower. You can also reduce your tax bill by paying into your pension in the new tax year. Also all pay in lieu will be in the new tax year. If you go straight to a new job it doesn't make a difference, but if you're unemployed for a while it does help.

          Why companies don't do this more often is beyond me, it will make the pill less bitter.

          I work in IT and not in Tax, so if you know better please correct any errors.

          0 0 Reply
          1. flibble
            Reply Icon

            Payments in lieu of notice would (I would think) be deemed payable on the day employment ended, and hence taxable then. The tax treatment of PILONs is even more complicated as they can sometimes be tax free.

            If you instead remain employed for your notice period, the pay would (as you say) be taxed in the new tax year, and it would extend the period you were employed by the company, and legally you generally couldn't start a job with a new employer till the end of the notice period (unless you arrange with them to leave earlier, in which case they may well argue they don't need to pay the rest of your notice pay).

            Employer's generally do the former as they'd rather just end the employment relationship asap.

            0 0 Reply
  2. The First Dave

    I wish I was earning enough for such a short period on the Emergency tax code to leave me £6000 short!

    7 0 Reply
    1. Gaius
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      It might happen if your redundancy payout was taxed as if it was your monthly salary

      7 0 Reply
      1. flibble
        Reply Icon

        Redundancy pay (upto £30K) is tax free; the article seems to be referring to amounts that were taxable but were taxed at a potentially incorrect rate - ie. other amounts like notice pay, pay for holidays accrued but not taken, and so on. If your employer is well organised and the amounts are due before your leaving date these are often/usually taxed on a normal tax code rather than an emergency one.

        0 0 Reply
  3. Rich 11

    DXC currently has around 170,000 employees in 70 countries

    160,000...

    150,000...

    140,000...

    7 0 Reply
  4. elwe

    Good luck finding an employer who can do a P45 right

    Good luck finding an employer who can do a P45 right. The last couple I have left have done a final salary payment, then issued a P45. Then the next month they pay on call/overtime pay, which is typically a month delayed. When I asked for a revised P45, they didn't have a clue. Just like DXC.

    The HMRC system assumes a clean break from one employer and onto the next, without delayed payments. It is the HMRC system that is fundamentally broken. If you are payed overtime well in arrears there is no way to avoid going onto an emergency tax code, unless you use a non-final P45, in which case you may under pay tax.

    2 0 Reply
    1. Aitor 1
      Reply Icon

      Re: Good luck finding an employer who can do a P45 right

      Nope, it is the company that uses a broken system.

      They should pay a lump sum at the end that includes all money, with an explanation.

      That is the law in Spain, and it works okish. Not really ok because I have yet to receive the correct ammount (ussually I have received a bit too much).

      This is normal in spain when you change jobs (in any way).

      4 0 Reply
  5. Anonymous Coward
    Anonymous Coward

    This seems par for the course.

    HP (as it was then) screwed up my Redundancy. Took nearly 6 months to get it sorted by which time we'd moved into a new tax year. A real PITA.

    0 0 Reply
  6. Anonymous Coward
    Anonymous Coward

    This is exactly what happened to me when i was made redundant on 4th April this year.

    It has completely screwed up my tax code.

    The p45 effectively says I earn't less than 2k in tax year 16/17 when it is meant to reflect the taxable part of my redundancy - accrued holidays which was paid this tax year.

    They also haven't informed computershare that I have been made redundant yet - meaning im stuck with shares i cant sell without paying tax

    2 0 Reply
  7. Anonymous Coward
    Anonymous Coward

    They should call IBM

    They really know how to do the job properly. When I left their calculations were perfect. Probably because they have had lots of practice.

    2 0 Reply
  8. Mikel

    Correct image for this story

    Darn it Reg, the canonical photo for this story involves a red Swingline stapler.

    2 0 Reply
    1. Stevie
      Reply Icon

      Re: Correct image for this story

      I have one of thethe. The management tried to take it away but I took mine becauthe I athked for a thtapler thixteen yearth ago and I have yet to thee it so I bought my own red thapler and I thaid I wathn't going to thurender a thtapler that I had bought with my own money and anyway why do we all have to have black thtaplerth when the red oneth look nither and ...

      1 0 Reply
      1. Scroticus Canis
        Reply Icon

        Re: Correct image for this story @ Thtevie

        Ith that you Igor?

        0 0 Reply
  9. Doctor Syntax Silver badge

    The company declined didn't have anyone left to comment.

    0 0 Reply

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