SCHOOLS could end up bearing the cost of stress-related compensation claims if Muriel Benson's pound;47,000 payout provokes a flood of similar cases, a senior local government source says.
One prediction puts future payouts as high as pound;250,000, in cases where teachers are forced to retire in their 30s. Mrs Benson was 57 when she stopped teaching and her settlement covers three years' loss of earnings.
A senior local government official said: "It could be a direct cost on the schools because the authorities will have to pay more which will mean less money for schools."
Liability could follow the current model in unfair dismissal cases where the authority pays compensation unless it has good reason to charge it to the school's budget. If or when it would do so is not yet clear.
"It is a point we are not at yet," the official said. "When there is a judgment in court, you end up with a clear view of the factors."
In the 1994 case against Northumberland County Council's social work department the employer was held liable after ignoring workload concerns raised by the employee.
Premiums for employers' liability insurance, which covers payouts by local authorities, are also likely to rise as claims increase.
Alan Woof, of Zurich Municipal insurance company, which handles around 60 per cent of local authorities' cover, said: "Insurers will pay out. That is not going to be a problem. But premiums will go up if claims do. It is a fact of life."
Almost all authorities have cover, although some have "substantial" excess allowances which mean they pay smaller claims themselves.
Graham Lane, chairman of the LGA's education committee, said: "Local authorities will have to pay as we are the respondents in court, but it would come out of the collective schools' budget."