Benefit repayment: a guide for employers required to repay state benefit previously claimed by an employee who has won an employment tribunal award

• where a decision is announced at the tribunal hearing: within 21 days following the announcement or within 9 days of the decision being sent to the parties, whichever is the later, or as soon as practicable after this period;
  
• where no such announcement is made: within 21 days of the decision being sent to the parties, or as soon as practicable after this period. The recoupment notice is an instruction to the employer to pay the Jobcentre Plus, out of the amount due under the award, the smaller of the following:
  
• the ‘prescribed element’ - after any income tax and national insurance contributions due have been deducted (see below), or
  
• the total amount of Jobseekers' Allowance or income support received by the individual for any part of the period covered by the ‘prescribed element’.
  

As soon as notification is received, the amount of the ‘prescribed element’ over the amount specified in the recoupment notice, if any, is immediately payable to the individual.

• The recoupment notice is copied to the individual, so that he/she may check that he/she agrees with the amount of benefit stated as paid. Individuals who disagree with the amount of benefit specified in the recoupment notice should notify their Jobcentre Plus local office in writing, usually within 21 days of receiving the notice.
  

Protective awards

Where an employer has failed to consult on redundancy matters, the appropriate representative may apply to the tribunal for a protective award.

This award will require an employer to pay redundant employees or those proposed to be made redundant, for a ‘protected period’. The tribunal will determine the length of the ‘protected period’ (subject to a maximum of 90 days and the number of proposed redundancies), to run from the date when the first dismissal takes effect or from the date the award takes effect, if it is earlier.

Recoupment procedure

When an employment tribunal makes a protective award, it will notify the Jobcentre Plus and advise the employer to send the following information to the nearest Benefits Agency local office within 10 days of the decision being announced at the hearing, or if no such announcement is made, when it is sent to the parties:

• name, address and national insurance number of each employee entitled to a payment under the award, and
• the date (or proposed date) of termination of employment of each employee covered by the award.

If it is not reasonably practicable for the employer to comply within the 10-day period, the information must be sent as soon as reasonably practicable afterwards. This information is required to enable the Jobcentre Plus local office to calculate how much Jobseekers' allowance or income support each individual may have received during the period covered by the protective award, and to prepare recoupment notices.

The employer must not pay any employee who has claimed or received Jobseekers' Allowance or income support until a recoupment notice is received from the Jobcentre Plus local office. The recoupment notice will advise the employer of the amount of benefit paid to the employee, or give notification that there will be no recoupment.

The Jobcentre Plus local office will issue a recoupment notice or notification to the employer within 21 days of receiving the above information or as soon as practicable afterwards. The recoupment notice is an instruction to the employer to pay a specified amount to the Jobcentre Plus out of the amount due under the award. This amount will be the smaller of the following:

• the amount due, after any due tax and national insurance contributions have been deducted (see below), from the start of the period to which the protective award relates, until the date that the Jobcentre Plus local office receives the necessary information from the employer, or
• the total amount of Jobseekers' Allowance or income support received by the employee for any part of the same period.

As soon as the employer receives notification, he/she must immediately pay the amount of the protective award above the amount specified in the recoupment notice, if any, to the individual.

The recoupment notice is copied to the individual so that he/she may check that he/she agrees with the amount of benefit stated as paid.

If the employer does pay an employee before receiving a recoupment notice, the employer will still be liable to pay to the Jobcentre Plus the amount specified on the recoupment notice.

Interest on tribunal awards

Awards which are not paid within 42 days of the date when the tribunal’s decision is sent to the parties, will attract simple interest on the amount of award outstanding. Amounts payable to the Jobcentre Plus under the Recoupment Regulations are not included in the calculation of interest.

Income tax and national insurance contributions

Income tax and national insurance contributions are not normally deducted from tribunal awards of compensation where the employment relationship has already ceased (these awards are generally based on net pay).

• Where an award is over £30,000, income tax may be payable.
• Where an order for reinstatement or re-engagement has been made, income tax and national insurance contributions on the pay due for the period between the date of dismissal and the date of reinstatement or re-engagement, will be payable by the employer in the usual way as if the employee had not left the employer’s service.

Further hearings

If an appeal is made, or a review applied for, the Jobcentre Plus local office may suspend recoupment until the outcome is known.

Where recoupment has already taken place and the amount of recoupable benefit is subsequently altered as a result of an appeal or a review of a tribunal’s decision, the Jobcentre Plus pay back any excess to the employer, or recover a further amount, if appropriate.

Top