The EAT has held, in the cases of Sheffield Forgemasters International Limited v Fox and Telindus v Brading, that the mere fact that a claimant is in receipt of incapacity benefit does not prevent him or her being awarded compensation for loss of earnings for the same period.

In each of the cases, the individuals had been dismissed and had won their respective claims for unfair dismissal and disability discrimination. The tribunal awarded compensation for loss of earnings for periods when the claimants were receiving incapacity benefit. Upholding their claims and the decision of the tribunal, the EAT held that the Social Security Regulations provide for situations where individuals are deemed to be "incapable of work" and therefore eligible to receive incapacity benefit, but that does not automatically mean that they are in fact incapable of working. It is possible for an individual who is in fact able to work to satisfy various tests for deemed incapacity for the purposes of incapacity benefit.

Impact on employers

This decision highlights the need for employers to take care to follow procedure and act fairly when dismissing employees on the grounds of ill health. Such employees may be able to claim loss of earnings notwithstanding that they are in receipt of incapacity benefit at the time of the dismissal.