Tribunal compensation: which benefits count?
When an employment tribunal awards compensation for lost earnings, the aim is generally to compensate the employee for the financial loss they have actually suffered. Benefits received during that period may therefore need to be taken into account.
But what happens if the compensation award itself means the employee loses their entitlement to those benefits?
That unusual question arose in SBH Windermere v Nunns.
SBH Windermere v Nunns
Mr Nunns succeeded in several harassment claims and was awarded compensation for six months’ lost earnings.
The tribunal initially deducted the Universal Credit it expected him to receive during that period. There was, however, a problem. Once compensation was awarded, Mr Nunns’ savings would exceed the £16,000 Universal Credit limit, meaning he would not actually receive the benefit the tribunal had deducted.
The tribunal reconsidered its decision and increased his loss of earnings award accordingly.
The EAT agreed that it was entitled to do so. It would not properly compensate Mr Nunns to deduct a benefit he would not actually receive.
But that was not the end of the story.
The employer argued that Mr Nunns could instead have claimed New Style Jobseeker’s Allowance or New Style Employment and Support Allowance, neither of which depended on his savings.
Once the tribunal reopened its calculation, it also needed to consider that wider mitigation argument. The case was sent back to decide whether Mr Nunns should have claimed those benefits.
What does this mean for you?
Remedy calculations are not simply about salary.
When assessing potential tribunal exposure, employers should consider what benefits the employee actually received, what they will remain entitled to receive following an award, and whether there were other benefits they could reasonably have claimed to reduce their loss.
Nunns is a useful reminder that compensation requires a look at the employee’s real financial position, not simply a theoretical benefits entitlement.