IRENE MORGANS AND RUTH MURNEY AGAINST JULIA STEWART LTD [2016] ScotSC 52 (18 August 2016)

IRENE MORGANS AND RUTH MURNEY AGAINST JULIA STEWART LTD [2016] ScotSC 52 (18 August 2016)

Where sums awarded for breach of contract are taxable as earnings, the court should decree for net sums after deduction of PAYE and National Insurance, with the employer required to account to HMRC for statutory deductions; parties' agreement on net figures enables precise decree.

Citation
[2016] ScotSC 52
Parties
Pursuer/appellant: Irene Morgans; Pursuer/appellant: Ruth Murney; Defender/respondent: Julia Stewart Ltd
Jurisdiction
Scotland
Judgment Date
18 August 2016
Procedural Posture
Appeal (civil, Employment Contract) / Judgment on Appeal
Outcome
Appeal allowed; sheriff's findings recalled and substituted; decree granted for net sums.
Legal Topics
Remuneration, PAYE Deductions, Net Vs Gross Salary, Interest on Awards, Taxation of Employment Awards
Employment Law Contract Law Remuneration PAYE Deductions Net Vs Gross Salary Interest on Awards Taxation of Employment Awards

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Parties

Irene Morgans

Pursuer/appellant

Ruth Murney

Pursuer/appellant

Julia Stewart Ltd

Defender/respondent

Procedural Posture

Appeal (civil, Employment Contract) / Judgment on Appeal

Legal Issues

  1. 1 Whether the court should award gross or net sums for unpaid contractual earnings
  2. 2 Whether the employer is obliged to deduct PAYE and National Insurance from court-ordered payments
  3. 3 Whether the sheriff erred in dismissing claims for lack of net loss evidence

Ratio Decidendi

Where sums awarded for breach of contract are taxable as earnings, the court should decree for net sums after deduction of PAYE and National Insurance, with the employer required to account to HMRC for statutory deductions; parties' agreement on net figures enables precise decree.

Court Disposition

Appeal allowed; sheriff's findings recalled and substituted; decree granted for net sums.

Orders

  • Defenders to pay £7,000 to first pursuer after deduction of Income Tax and National Insurance, and account to HMRC for deductions.
  • Defenders to pay £31,500 to second pursuer after deduction of Income Tax and National Insurance, and account to HMRC for deductions.