Can personal independence payments (PIP) received by a claimant be set off to reduce their compensation?

Where an employment tribunal awards compensation, if the claimant has received either jobseeker's allowance, income-related employment and support allowance, universal credit or income support, then the government can recoup payments made from any compensation awarded (Employment Protection (Recoupment of Jobseeker's Allowance and Income Support) Regulations 1996 (the ‘recoupment regulations’). In practical terms, this process of statutory benefit recoupment means that the respondent(s) pay the full amount of compensation ordered by the tribunal, but part of the compensation is payable to the government to reimburse it for the benefits the claimant has received during the relevant period.

However, the recoupment regulations do not apply to any Personal Independence Payments (PIP). Does this in turn mean that no account should be taken of PIP when assessing a claimant’s compensation? The EAT has recently considered the extent to which PIP can be considered and whether the amount of any PIP the claimant has received consequential on the respondent’s actions can be set off to reduce their compensation.

F, a civil servant, had resigned from his employment and successfully claimed for disability discrimination and constructive unfair dismissal. The tribunal assessed his compensation a separate remedy hearing in the sum of £373,936.69. When calculating F’s compensation, the tribunal set off the PIP that F had received during as a result of suffering a health breakdown.

Both parties appealed different aspects of the remedy judgment. The EAT dismissed all grounds of F’s appeal and allowed the employer’s cross-appeal (which related to an error the tribunal made by using gross pay for the future loss multiplicand).

However, by far the most important point arising from an otherwise unremarkable judgment was the EAT’s confirmation that the tribunal had not erred when it had decided to set off F’s PIP against its compensation award (rejecting F’s appeal on this point). The EAT held that the PIP benefit was received by F in consequence of the employer's unlawful act (which had caused his health breakdown): but for that unlawful act the PIP would not have been received. There was no rule of law that provided that a state benefit provided for care costs could only be set off against a claim for damages for care costs.

In practical terms, this means employers can ask the tribunal to take account of any PIP the employee has received that is consequentially linked to its unlawful actions and use this to set off and reduce the overall amount of compensation payable.

Foat v Department of Work and Pensions [2026] EAT 61

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