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Employment tribunals - discrimination - whether any welfare benefits you have received will reduce your award

When working out how much compensation you should get for the financial loss you have suffered because of discrimination, you need to work out what your income would have been if you had not been discriminated against, and compare it with what your income actually was as a result of the discrimination. The difference between the two figures will give you your financial loss figure.

For example, if you gave up or lost your job as a result of the discrimination, you may have received benefits afterwards and/or at some point started a new job.

This document looks at how any welfare benefits you've received will affect the calculation of your compensation for discrimination.

There is no maximum cap on the amount of compensation that you can receive for discrimination.

Which welfare benefits are treated as income when calculating financial loss caused by discrimination?

When calculating the amount of compensation you will get for financial loss if your discrimination claim is successful, you need to work out a weekly ‘difference figure’ which is the difference between the weekly net income you received before you were dismissed, and the weekly net income you are receiving from welfare benefits.

However, not all welfare benefits are taken into account as income when calculating financial loss.

The following welfare benefits should be taken into account as income and should be included in order to work out your weekly difference figure or your weekly financial loss:

  • Jobseeker's Allowance
  • Employment Support Allowance
  • incapacity benefit
  • income support
  • statutory maternity pay.

Housing benefit and any payments you receive in order to help you pay council tax are not taken into account when calculating compensation.

Disability-related benefits are not taken into account. For example, Disability Living Allowance is not taken into account.

What if you are claiming unfair dismissal and discrimination at the same time?

If you are claiming unfair dismissal and discrimination at the same time, and both claims succeed, the compensatory award for unfair dismissal and the compensation for financial loss because of the discrimination ‘overlap’, because they are both compensating you for the financial loss resulting from the dismissal which was also the act of discrimination. You do not get double the compensation, but instead you get one or the other.

The tribunal should order your employer to pay you your financial loss under the discrimination claim rather than the unfair dismissal claim, and you are entitled to ask it to do so. It is preferable to do this because:

  • there is no cap on the amount of compensation you can get for financial loss under a discrimination claim, but there is a cap on the compensatory award for unfair dismissal
  • the tribunal has the power to make more deductions, or reduce your compensation for more reasons, under the compensatory award for unfair dismissal than it does when assessing compensation for financial loss as a result of discrimination
  • if the compensation for financial loss is paid under the unfair dismissal claim, certain welfare benefits that you have received are ‘recouped’. This means that the tribunal orders your employer to pay back an amount equivalent to the benefits you have received to the Department for Work and Pensions (DWP). You will get the amount that is left after your employer has done so. The tribunal will tell the DWP that you have won your claim. The DWP will work out how much you have received in benefits and send your employer a request for this amount. This procedure can take time to complete
  • if the compensation is paid to you under the discrimination claim, you won’t get more money, but the tribunal will decide how much income you have received from welfare benefits, and take this into account when calculating your financial losses.

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