Employment: Compensation can be reduced for earnings

Posted on 9th January, 2009

Estimated reading time 2 minutes

In unfair dismissal cases an employee does not have to give credit for earnings from alternative employment during the normal notice period (known as the “Norton Tool principle” after the case that established the rule).

In a recent case the Court of Appeal has drawn a distinction between unfair dismissal cases where the employer has dismissed the employee and constructive unfair dismissal cases, where the employee resigns and claims that the behaviour of the employer was such as to entitle them to bring the contract to an end and seek compensation.

The court rejected the argument from an employee claiming constructive dismissal that she was entitled to compensation for the full six month notice period, despite having obtained temporary work for three months during the period.  In assessing compensation the employers were entitled to full credit for the earnings from other employment during the nominal notice period.

The court ruled that the Norton Tool principle is a limited exception to the general rule that compensation must reflect actual loss.  It should not be extended to constructive dismissal cases where the employee triggers the termination of the employment.


Stuart Peters Limited v Bell [2009] EWCA Civ 938, 30 July 2009

For further information or to discuss the issues raised, please contact Colina Greenway (colina.greenway@abbisscadres.com) on +44 (0) 203 051 5711.


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