Compensation for injuries at work
Definitions or restrictions
Your employee is injured at work, and you make a compensatory payment
to them that meets all of the following conditions:
- it is in return for the employee’s agreement not to pursue a legal
claim against you
- it follows discussion and negotiations between you and the employee
about how to compensate them for their injury
- it is no different from a payment you would have had to make to
a member of the public in similar circumstance – such as someone who
fell and was injured on your business premises
- the employee has no automatic entitlement to the payment under
the terms of their employment contract with you
What to report, what to pay
As long as the conditions above are met, you have:
- no reporting requirements
- no tax or NICs to pay
Technical guidance
EIM06450: Employment income
- injury payments
NIM02110: Class 1 NICs -
damages
