Anna Yerrakalva, 57, claimed she was injured when a colleague fell on top of her during an epileptic fit.
She said she was pinned down for 15 minutes and suffered damage to her neck and spine. But after an investigation the school said her injuries could not have been caused in the way she described.
Education chiefs in Barnsley, South Yorkshire, continued paying her salary until she was sacked for gross misconduct in January this year for making false claims.
On top of the huge wage bill, Barnsley council faces legal costs of £100,000 fighting her employment tribunal claim for victimisation and unfair dismissal.
A hearing in Sheffield yesterday heard how Mrs Yerrakalva went sick from her post at Dearne Carrfield primary school in Bolton-on-Dearne, South Yorkshire, after the alleged incident in November 2003. She returned briefly, but was struck by a bus in June 2004, and has never worked since.
Headteacher Stephen Poxton told the tribunal that the accident allegedly happened as she knelt down to set up a display.
A teaching assistant did have a fit, but an investigation concluded Mrs Yerrakalva had lied and “her injuries were not sustained in the way she described”.
Mrs Yerrakalva later filled in Department of Work and Pensions forms claiming disability living allowance and industrial injury benefit in 2006 and 2007.
She said she needed help eating, dressing and going to the toilet, and suffered learning problems and panic attacks. Yet in August 2006 she told her employers she was fit to return to work.
Mr Poxton said that Mrs Yerrakalva was sacked after lying about her health. “Her claims caused a considerable amount of aggravation for the school and an irreparable breakdown of confidence.”
Mrs Yerrakalva refused access to her medical records and had made “vague and unsubstantiated” complaints against others.
Mrs Yerrakalva disputes much of the council’s case and will give her evidence when the hearing resumes next year.
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