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HMRC internal manual

National Insurance Manual

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HM Revenue & Customs
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NIM07030 - Class 1 NICs: Payments made under employment legislation: Unfair dismissal: Pay arrears under a re-engagement order: General

Sections 111-116 Employment Rights Act 1996

If an employee believes they have been dismissed unfairly by their employer, they cancomplain to an employment tribunal (“ET”) (in Northern Ireland, an industrialtribunal). If the ET upholds the complaint, it may order the employer to re-engage theemployee:

  • if this is what the employee wants; and
  • if the ET considers that the alternative job is suitable and on comparable terms and conditions to those of the job from which the employee was dismissed.

As part of a re-engagement order an ET must also specify the amount, if any, that theemployer must pay the employee. For instance, this might include arrears of pay from thedate of dismissal to the date of re-engagement.

In calculating any amount that the employer must pay the employee, the ET must take intoaccount certain payments received by the employee between:

  • the date on which they were dismissed; and :
  • the date on which they were re-engaged.

The payments that the ET must take into account are:

  • wages in lieu of notice or ex gratia sums;
  • remuneration paid in respect of employment by another employer;
  • such other benefits as the ET thinks appropriate.

For details of the NICs treatment of payments made under a re-engagement order, see NIM07031.