An employee whose terms and conditions of employment provided for a three-month notice period was made redundant. The letter that confirmed the termination of her employment stated, among other things, that:
– the termination took “effect from today”
– she had a “continuing duty of confidentiality” under the terms of her contract, after her employment had terminated
– during the following three months she would not be required to attend the office, but should make herself available for work if required
– that her pay in lieu of notice would be paid through payroll in the normal manner on the normal day.
The employee was not required to attend the office again, and she later submitted a self-assessment form on the basis that the payments she received were not taxable. The inspector of taxes amended that form, making the payments taxable. The Special Commissioner dismissed the employee’s appeal, and she appealed to the High Court.
It dismissed her appeal as well, and held that although the termination letter was expressed to take immediate effect, the most convincing of the possible interpretations of the letter was that the employee had been given three months’ notice, and had been put on ‘garden leave’.
Her duty of confidentiality continued after her employment had terminated. Therefore, the payments were taxable as emoluments of employment.