Incapacity Benefit and Compensation

In the conjoined appeals of Telindus Ltd v Brading and Sheffield Forgemasters International Ltd v Fox, the EAT (Silber J presiding) held that the mere fact a claimant received incapacity benefits for a period did not preclude him from recovering compensation for loss of earnings during the same period (subject to the rule against double recovery).

In each case, the claimant was dismissed, and the dismissal was held to be unfair and discriminatory. The Employment Tribunals awarded compensation for earnings which the claimants would have received had they not been unfairly dismissed or discriminated against, including in each case a period during which the claimant received incapacity benefit. The employers contended that the receipt of incapacity benefit should have prevented the tribunal from awarding damages for loss of earnings, because under the relevant statutory benefits scheme eligibility for incapacity benefits depended on a person being “incapable of work”; and unless that incapacity was itself attributable to the respondent’s unlawful conduct, the claimant should not be awarded damages in respect of that period.

The EAT held that statutory the definition of “incapable of work” was a deeming provision which applied only for the purposes of the benefits system, and observed that many people who satisfy this test might still, as a matter of fact, be able to work.

It did not follow therefore that a person incapable of working for purposes of the benefits scheme must be regarded as unable to earn during the period of incapacity.