A gross injustice avoided — employer allowed to make settlement payment net of tax

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When the claimant in Barden v Commodities Research Unit International was dismissed as chief executive officer, he entered a severance agreement, including payment of a long-term incentive plan (LTIP). When the LTIP was not paid, he issued proceedings, which were eventually settled after mediation. The settlement agreement, signed in the early hours of the morning, provided for a ‘settlement sum’ of £1.35m to be paid to the claimant. The tax treatment of the sum was not mentioned in the agreement…

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