Jones v Global Crossing (UK) Telecommunications Ltd [2008] All ER (D) 19 (Sep)
When assessing damages for wrongful dismissal, the court or tribunal is required to assess what the employee would have received had the contract been performed. That requires a calculation of what he would actually have received, ie net of tax.
However, the tax regime has to be taken into account so that the sum which the employee receives as damages, in his hand, is sufficient to enable him to discharge any tax liability that he may have to the Inland Revenue in respect of the sum awarded.
Therefore, the calculation involves taking the first £30,000 (tax free under s 148 of the Income Incorporation Taxes Act 1988) and deducting it from the net figure to which the tribunal has come and then on the balance of that figure, grossing that figure up in order to ascertain what the tax bill is likely to be that the employee will face, having received that sum in his hands.
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