Reply To: Employer paying health insurance


We have a case like this that is proceeding to Tribunal at some point. Just for clarification though our clmt is appealing against an overpayment and whilst he did suggest that the PHI was not earnings he has back tracked from that. He has confirmed that he is unable to work and not able to return yet. His employer was paying him sick pay until it exhausted, he then began to receive PHI which was via a policy his employer took out to protect against staff on long term sick. He too receives wage slips each month and this data is also reported to HMRC by his employer as earnings, on checking the VEP system we also established that some of the PHI payments are subject to tax and NI contributions (depending on the level of course). We are not sure about schedule 5 as this policy is not to cover any loans etc. Anyway, in our opinion we have treated it as earned income in accordance with Reg 35(1)(j) as that is what all the evidence points too-

Regulation 35(1)(j) – Earnings of employed earners
35-(1) Subject to paragraph (2), “earnings” means in the case of employment as an employed earner, any remuneration or profit derived from that employment and includes-
(j) any remuneration paid by or on behalf of an employer to the claimant who for the time being is….absent from work because he is ill;

We may be wrong of course but are pretty confident it will remain as earnings but I will surely re-post the result of the tribunal hearing if a judge decides otherwise. As you really never know with situations like this that are pretty rare, first one I have seen in decades.