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There is little authority on the extent to which tax must be taken into account in computing damages for loss of pension rights consequent on the wrongful dismissal of an employee. As noted at E4.802F, E4.841, special contributions to registered pension schemes or employer-financed retirement benefit schemes, are not taxable provided that they are part of an arrangement relating to the termination of a person's employment and in order to provide benefits in accordance with the rules of the scheme or approved personal pension arrangements¹.

The Gourley principle was applied by Wynn-Parry J in the 1956 case of Re Houghton Main Colliery Co Ltd². In that case, the company was under a contractual obligation to pay pensions to X and Y and, when the company went into liquidation, the liquidator took out a summons to determine (inter alia) whether tax should be taken into account