EIM13916 - Termination payments and benefits: example: Section 401 ITEPA 2003: payment or benefit received by someone other than the employee
Section 401(1) ITEPA 2003
Example 1
An employee suffering severe psychological problems is dismissed from employment. Following Court action by relatives, the ex-employer is ordered to pay 拢25,000 compensation for unfair dismissal to the employee鈥檚 spouse.
Although the ex-employee never receives the 拢25,000, it is within the scope of Section 401 ITEPA 2003 because the spouse of the employee receives it. The same would apply if the employee鈥檚 blood relative, dependent or personal representatives received it (see EIM13020).
Example 2
As part of a settlement on termination of employment, an employer agrees to pay 拢10,000 to the employee鈥檚 golf club, securing lifetime membership and other benefits.
The golf club is not within the class of recipients covered by Section 401 ITEPA 2003 (see EIM13020), the payment is not received by the spouse or any blood relative or dependant of the employee nor the employee鈥檚 personal representatives.
See EIM13918 for the reason that the 拢10,000 is nevertheless within Section 401 ITEPA 2003.