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Industrial Tribunals Northern Ireland Decisions
You are here: BAILII >> Databases >> Industrial Tribunals Northern Ireland Decisions >> Grattan v Department for Employment and ... [2011] NIIT 00920_11IT (28 October 2011)
URL: http://www.bailii.org/nie/cases/NIIT/2011/00920_11IT_2.html
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THE INDUSTRIAL TRIBUNALS
CASE REF: 920/11
CLAIMANT: Loren Grattan
RESPONDENT: Department for Employment and Learning
DECISION ON AN APPLICATION FOR REVIEW
The review application is upheld. The Decision dated 21 September 2011 is varied by substituting the following paragraph for paragraph (B) of that Decision:
“The claimant’s appeal in respect of holiday pay is well-founded. It was ordered that the Department shall pay to the claimant the sum of £372 in respect of holiday pay.”
Constitution of Tribunal:
Chairman (sitting alone): Mr P Buggy
Appearances:
The claimant was self-represented.
The Department was represented by Mr P Curran of its Redundancy Payments Branch.
REASONS
1. This Decision sets out my determination, and the reasons for that determination, in relation to the application for review, on the part of the Department, of the main decision in this case (“the Main Decision”), which was confirmed in writing on
21 September 2011. In this Decision, any reference to “the Main Decision” is a reference to the written version of that Decision.
2. These proceedings were the subject of a main hearing on 16 September 2011. At the end of that main hearing, I announced my decision. At that time, I also gave oral reasons for that decision.
3. According to that decision, the claimant was entitled to the sum of £605 in respect of holiday pay, being a sum due to the claimant in respect of accrued holiday pay entitlements which were due to her by the time of her dismissal (by reason for redundancy) from her employment with Heffer Hill Limited (which is now in liquidation).
4. During the course of the main hearing, it was not suggested to me that my method of calculation of the holiday pay was in any respect incorrect, and I did not myself notice that it was incorrect.
5. However, in the afternoon of 16 September, Mr Curran, on behalf of the Department wrote to state that he believed that the correct amount of any holiday pay should be approximately £371 less tax.
6. The parties were immediately told that Mr Curran’s letter of the afternoon of
16 September was being treated as an application for review of the oral decision of 16 September. (That oral decision was subsequently confirmed in writing in the Main Decision of 21 September).
7. This is my Decision in respect of that application for review.
8. During the course of the hearing of this application for review, the parties were helpful and co-operative and pragmatic, and I am grateful to them for the spirit in which they have approached this application for review.
9. The parties were agreed that there had indeed been a miscalculation. They were also agreed that a figure of £372 should be substituted (as the amount of holiday pay due) for the figure of £605, unless the figure of £372 had to be reduced, in the award itself, to reflect any liability for income tax.
10. I agree that, subject to the question of the implications in relation to income tax, the correct figure is £372.
The amount of the award
11. Accordingly, in this Decision, the only matter I have to decide is whether or not the figure awarded by me should be cut down in the main Decision itself, to reflect any income tax issues.
12. After considerable research, I have come to the conclusion that it is appropriate that I should award the full sum of £372, in this Decision, leaving the parties (the Department and the claimant respectively) to consider any tax implications.
Should the Department make tax deductions?
13. I know that the Department takes the view that it is under an obligation to make deductions from the amount of any holiday pay award in this case, and to account to HMRC in respect of such deductions.
14. I have no entitlement to rule on the question of whether or not the Department would be right or wrong to make such deductions. (If the Department is wrong to make such deductions, the claimant will have rights of appeal, under income tax law.)
15. Accordingly, what follows is very much a preliminary view, and is provided merely to assist the parties. It is not authoritative in any way.
16. My suspicion is that, under income tax law, the Department, when it pays out wages (which includes, for present purposes, accrued holiday pay) is subject to an obligation to make PAYE deductions, pursuant to section 62 of the Income Tax (Earnings and Pensions) Act 2003. That section explains what is meant by “earnings” in the employment income Part of the 2003 Act. It defines “earnings”, in relation to an employment, as including any salary, wages or fee, and as including anything else that constitutes an “emolument” of the employment.
17. I consider that the position is best summarised in “Selwyn’s Law of Employment” 14th Edition, at paragraph 15.10, in the following terms:
“The taxation of payments on the termination of employment is now covered by the Income Tax (Earnings and Pensions) Act 2003. The position is somewhat complicated because some such payments are taxable in full, some only partly so, and some not at all. The general principle is that if the payment constitutes “earnings” such as salary to the date of termination, accrued holiday pay, benefits in kind, etc, full income tax and national insurance contributions must be deducted … [My emphasis].”
18. I have no doubt that if this accrued holiday payment award was being made pursuant to a claim for debt against a former employer, it would be made as a gross payment, and the former employer would be obliged under income tax law to make deductions for income tax, just as a former employer would have been liable to make such deductions if the relevant payment had been made during the course of the claimant’s employment.
19. In my view, the amount of a tribunal award, in respect of accrued holiday pay, in circumstances in which that sum is payable by the Department, can be no less (subject to special rules which apply, in the context of statutory guarantees, regarding the weekly maximum and the period in respect of which holiday pay payments can be made) than the amount which would be payable if the award was being made pursuant to a claim for debt against the employer.
Summary
20. I have arrived at the views set out above with regret, because it seems to me to be very likely that any deductions which may be made from the sum set out above, to reflect income tax obligations, will become repayable in any event to the claimant at the end of the present tax year (because of the relatively low level of the claimant’s overall income from the beginning of the present year until the day of the review hearing).
21. Accordingly, in summary the position is as follows. The outcome of this review is that I have now determined, pursuant to Article 233(3)(b) of the Employment Rights (Northern Ireland) Order 1996, that the Department ought to make a payment to the claimant of the amount which has been specified in this Review Decision. However, I have made no determination (and I consider that I have no power to make any determination) as to any obligation on the part of the Department, under income tax law to make deductions from that amount.
Interest
22. This is a relevant decision for the purposes of the Industrial Tribunals (Interest) Order (Northern Ireland) 1990.
Chairman:
Date and place of hearing: 19 October 2011
Date decision recorded in register and issued to parties: