- Wrongful termination/repudiation of employment contract

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General earnings

​- Compensation to compromise a claim for wrongful repudiation of employment contract is not earnings from employment as it arises by reason of the disappearance of the employment (Du Cros).

- "The contract of service was at an end. The source of income had disappeared, and the sum paid by way of damages could not be regarded as a sum derived from the employment. It was something which arose outside the employment. It was something to which Mr. Du Cros became entitled by reason of the disappearance of the employment." (Williams's Executors at 38).

- Chibbett v. Robinson - payment to a firm that managed a company upon termination/liquidation out of the company's 'abundant prosperity' was a "testimonial for what they had done in the past in their office which has now terminated".

- "I do not think that is taxable as a profit. It seems to me that a payment to make up for the cessation for the future of annual taxable profits is not itself an annual profit at all I do not know whether it has arisen or been discussed, and perhaps the less I say about it the better, but I should not have thought that either damages for wrongful dismissal or a payment in lieu of notice, at any rate if it was for a longish period - I will not say a payment in lieu of notice, I will say a voluntary payment in respect of breaking an agreement which had some time to run - would be taxable profits. But at any rate it does seem to me that compensation for loss of an employment which need not continue, but which was likely to continue, is not an annual profit within the scope of the Income Tax at all." (at 61).Chibbett v. Robinson (1924) 9 TC 48; 

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Section 401

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Legislation: 

Cases: 

​Chibbett v. Robinson (1924) 9 TC 48; 

Du Cros v. Ryall (1935) 19 TC 444; 

CIR v. Williams's Executors (1944) 26 TC 23; 

HMRC manuals: 

Commentary: 

See also:

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