Newth Talks Tax: Is it reasonable for an employer to pass an HMRC fine on to an employee?

Posted by AccountingWEB PM | on Mon, 26/01/2009 - 09:12 3269 1 comment

This was the query asked by Ian Gibson on 21 November 2007. At the time he was group financial controller of a company, but not a director.

Due to the CHAPS system failing at the bank a few months ago, the company defaulted on its VAT payment for that month. Now, due to an admitted error by Ian, a second default had taken place (once again one day late), and the company had been fined £3,000.

The managing director had decided that Ian should pay the company fine.

Continued...

Employer's remedy.

Anonymous | Mon, 26/01/2009 - 18:21 | Permalink

Anyone heard about insurance? Very useful if you want to insure against business risks like one of your employees making a mistake about paying the business's VAT on time.
Docking the unfortunate employee's pay is likely to be regarded by an employment tribunal as 'an unlawful deduction from wages' : ss.13-15, Employment Rights Act 1996.
A contractual deduction is lawfully however if the employee has given her or his written consent. But the employer must show that the deduction is justified: Fairfield Ltd v Skinner (1992) IRLR 4.
The employer may have grounds for dismissing the employee for the reason of (in)capability that is one of the six statutory fair reasons for dismissing an employee. Before doing so the employer would need to fully complete the statutory disciplinary and dismissal procedures in order to avoid an automatically unfair dismissal on procedural grounds.
Note that these statutory procedures are to be repealed and replaced by the ACAS Code of Practice on Disciplinary and Grievance Procedures that comes into force on 06 April 2009: Employment Act 2008 that received Royal Assent on 13 November 2008.