EIM02550 - Employment income: employment protection legislation: Employment Rights Act 1996

The Employment Rights Act 1996 ('ERA') sets out many of the statutory rights which an employee has. It gives Employment Tribunals power to order employers who infringe those rights to make payments of compensation. ERA only applies in Great Britain but similar legislation applies in Northern Ireland.

For compensation for unfair and wrongful dismissal see EIM12960.

The following payments that a tribunal may order an employer to make count as earnings under Section 62 ITEPA 2003 (see EIM00515):

  • guarantee payments under Sections 28 and 34(3) ERA.
  • payments to an employee suspended from work on medical grounds under Sections 64 and 70(3) ERA.
  • maternity suspension payments under Sections 68 and 70(3) ERA.
  • payments under Sections 51(3)(b) or 63(4) ERA for infringing the employee's rights to time off for public duties under Section 50 or Trade Union duties or activities under Sections 61 and 62 respectively.
  • payments under the Sex Discrimination Acts, the Equal Pay Act 1970 (see EIM02530), the Wages Act 1986, the Trade Union and Labour Relations (Consolidation) Act 1992 and the National Minimum Wage Act 1998 for wrongfully depressing the employee's remuneration in the employment. See EIM42290 for guidance on when arrears of pay are assessable to income tax.

Compensation paid for an employer's failure to consult employees about redundancies (under the Trade Union and Labour Relations Act) is taxable only under Section 401 ITEPA 2003 (see EIM12800 onwards).

On making any of the above payments, the PAYE Regulations apply.

(This text has been withheld because of exemptions in the Freedom of Information Act 2000)