TUPE settlements and credit against compensatory award

[Thanks to Ed McFarlane of Deminos HR for preparing this case summary]

Should a compensatory award be reduced to take into consideration sums received through a settlement with another party?

Yes, says the EAT in Optimum Group Services v Muir.

The Claimant won his unfair dismissal claim in a TUPE scenario against the Appellant, having settled his claim against the second Respondent before the hearing. The employment tribunal declined to reduce the compensatory award to take into account the Claimant's settlement with the second Respondent.

The EAT reduced the compensatory award to take into account the settlement with the second Respondent. Reminding tribunals that the compensatory award is not intended to operate as a 'penalty', the EAT held that it would not be right for a Claimant to make a 'profit' through double recovery; tribunals had no discretion in this matter. A Claimant's loss that has been made good must be taken into account (except where the Norton Tool principle applies to notice pay). The EAT also warned tribunals about taking into account irrelevant factors, such as a 'windfall' to a party, in these circumstances.

The EAT ordered the Claimant to disclose the amount of the settlement, and practitioners may consider it prudent to itemise sums paid for heads of claim if making a settlement in similar circumstances.