Settlement Agreement Lawyers & Solicitors – Redundancy

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Tax Indeminty

July 17th, 2009 · 38 Comments · Basic Rate of Tax, Compromise Agreements, National Insurance Contributions, Post Termination Restrictions after Signing a Compromise Agreement, Signing Compromise Agreements, Your Compromise Agreement is a Binding Contract

Each compromise agreement has a tax indemnity.  It usually causes a lot of discussions when we are advising Employees. It is a safe guard for the Employer in case the Employer has to make a payment to the Inland Revenue in respect of pyaments made to an Employee under a compromise agreement.  A typical tax indemnity provision is as follows:-

  • Except in respect of income tax or employee’s National Insurance contributions deducted by the Employer, the Employee undertake to be, responsible for any income tax, employee’s National Insurance contributions, fines, interest, costs and/or penalties arising in respect of all and any of the payments made and benefits provided under this Agreement (“Tax Liability”) including, for the avoidance of doubt any Tax Liability on the first £30,000 of the Compensation Payment and Employee indemnify and will keep indemnified the Employer and any companies associated withthe Employer  against any claim or demand which is made against the Employer  or any  companies associated withthe Employer in respect of any such Tax Liability.  The Employee undertake immediately to pay to the Employer on demand any such Tax Liability.

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