Pension credit and severance pay: Income or capital or neither?

I have a client who is owed £3600 in holiday pay as he has been off sick for a while.

His employer wants to let him go and wishes to make a one off payment of £10,000 to reward years of loyal service but doesnt want it to negatively affect his existing PC claim.

He has no savings so tarrif income isnt a problem, but will the 10K payoff (that includes the £3600 owed hol pay) be classed as any kind of income that may affect GPC.

I think his 36 days holiday pay may possibly be classed as 36 days work but what of the other £7400?

The employer wants the full 10K to be considered as a severance payment

Opinions would be welcomed.

Thanks, as always

Lower capital limit for Pension Credit is £10k anway, so if as you say he has no other savings, the question is surely academic?

Sorry, my bad - just realised you were talking about ongoing entitlement…..

A redundancy payment would be disregarded, but it’s not a redundancy.

He’d be in the clear if he’d received the payments before claiming PC, but it seems payments where there is an extant claim are treated as earnings/income in the normal way (i.e. the £7,400 would be divided by whatever his regular weekly/monthly earnings had been and then treated as income over the resulting period).

There’s no prospect that the employer would take him back if he felt well enough to return to work?

CPAG p308 appears to answer your question.

NB 10,000 - 3,600 = 6,400.

Whoops! Forgot to carry the one in my head! Thanks guys