Employment tribunals: set off available in contract claims

Businesses will welcome the first reported case confirming that set-off is available in an employment tribunal. The Employment Appeal Tribunal upheld a tribunal’s decision that the defence of set-off is available to an employer in a contract claim brought by a former employee in the tribunal and that the law of contract, including any defences, is intended to work in the same way before a tribunal as it works before the civil courts.

The decision confirming the availability of the defence may be helpful for employers due to the relatively short time limit to bring a counterclaim. However, this does not mean that there is no longer any need for a valid counterclaim. Simply raising the claim as a set-off would leave the employer without a proper remedy where the employee’s contract claim fails on its own merits (leaving the employer with nothing against which to apply the set-off) or where the employee’s claim is significantly less than the employer’s.