The summer sun has not slowed the pace of important decisions
and legislative updates for employers to be aware of. Summarised
below are three of the most notable.
Payments to continuing employees in settlement of claims may be
subject to tax
It is widely understood that payments of up to £30,000,
made in settlement of certain claims, may be paid on a tax-free
basis. However, a recent determination by the Tax Tribunal serves
as a reminder that this is not a rule without exception and careful
consideration should be given to the tax treatment of any such
payments made to continuing employees.
The Tax Tribunal's decision relates to a case where the
employer had required an employee to work from a new location and
the employee had alleged breach of contract in response. To resolve
matters, the parties entered into a settlement agreement, under
which the employee received £30,000 tax free. The employee
then worked from the new location. Before the Tax Tribunal, it
