Compensation

Case 5: The facts

Mr Morgans won an unfair dismissal claim, but his compensatory award was reduced by the amount of incapacity benefit he had received. He appealed to the Employment Appeal Tribunal (EAT), which was asked to resolve a number of conflicting decisions on this issue.

The ruling

The EAT held that the basis for unfair dismissal compensation, as set out in section 123 of the Employment Rights Act 1996, is the reimbursement of the loss suffered. All earnings must be taken into account, otherwise claimants would end up recovering more than the losses they had sustained. It ruled that the full amount of incapacity benefit received had to be deducted from the compensatory award.

Morgans v Alpha Plus Security UKEAT/0436/04