Unfair dismissal ‘windfall’ loophole closed

Any claimant who wins compensation for unfair dismissal will now have the amount reduced by any incapacity benefit they have claimed, following a ruling by the Employment Appeals Tribunal (EAT).

Previously tribunals would reduce the compensatory award by 50 per cent of any incapacity benefit already received by a claimant.

Daniel Barnet, a barrister at 1 Temple Gardens, said this meant that if losses of earnings were £10,000 and the claimant had received £2,000 in incapacity benefit, the award would be reduced by 50 per cent of £2,000, ie, to £9,000.

This rule has now been overturned in the case of Morgans v Alpha Plus Security, where the EAT held that tribunals must deduct the entire amount of incapacity benefit from the compensatory award.

Failing to do so would result in a wrongful windfall to the claimant, the EAT ruled.


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