Whyte v London Borough of Lewisham

In calculating the loss-of-earnings element of compensation for unfair dismissal, incapacity benefit received during the relevant period is deductible in full from the employee’s net pre-termination wage.

The Employment Appeal Tribunal will not interfere with a tribunal’s finding as to benefits received where there was evidence capable of supporting it. Under the Employment Protection (Recoupment of Jobseekers Allowance & Income Support) Regulations 1996, the Department for Work and Pensions must give the employer the notice required by Regulation 7(2). A notification sent only to the employee does not permit release of the prescribed element.

The claimant succeeded before the Employment Tribunal on his unfair-dismissal claim because he had not been given a right of appeal, making the dismissal automatically unfair under section 98A(1) of the Employment Rights Act 1996. At the remedy hearing, the Tribunal awarded £5,404.63, including a compensatory award for loss of earnings during the relevant period.

The claimant appealed the remedy decision and the refusal of a review. Following withdrawal of bias allegations, the permitted issue was whether incapacity benefit and/or jobseeker’s allowance had been received during the relevant period and could be deducted from compensation. A further issue arose because the Department for Work and Pensions had not served the employer with a recoupment notice concerning the prescribed element.

1. Appeal dismissed. The Tribunal made no error of law in deducting incapacity benefit from the claimant’s net pre-dismissal weekly wage when calculating loss of earnings.

2. The Tribunal was the fact-finder. There was evidence, including the claimant’s oral evidence at the remedy hearing, on which it could find that he had received incapacity benefit during the relevant period. The Employment Appeal Tribunal could not substitute a different factual finding. The review application raised no new point undermining the summary rejection of it.

3. Following Morgans v Alpha Plus Security Ltd [2005] ICR 525, the full amount of incapacity benefit must be deducted from net wages when assessing the loss-of-earnings component of a compensatory award. The earlier authorities had been considered in that decision, and the Tribunal applied its reasoning.

4. The Tribunal had correctly notified the Department for Work and Pensions of the prescribed element under the Employment Protection (Recoupment of Jobseekers Allowance & Income Support) Regulations 1996. The Department’s duty under Regulation 7(2) was mandatory: it had to serve the employer with a recoupment notice or notify the employer in writing that it did not intend to do so. Its letter to the claimant alone was insufficient. Until that occurred, the employer could not safely release the prescribed element. The Tribunal directed that the Department be sent a copy of the judgment.

• Employment Appeal Tribunal: dismissed the claimant’s appeal from the remedy and review decisions.
• Employment Tribunal: upheld the unfair-dismissal claim on the limited basis that dismissal was automatically unfair under section 98A(1) of the Employment Rights Act 1996, and later awarded compensation of £5,404.63.