In what is being seen as the first successful jail-based, work-orientated stress claim against the Home Office, the prison officer complained that under-staffing, workplace pressures and a lack of help were instrumental in him suffering a series of mini-breakdowns.
The 46-year-old man, who is not being named, worked at the Castington Young Offenders' Institution in Northumberland from 1983 until he was medically retired by the Prison Service in 1997.
The A wing, where he was based, which was also referred to by officers as "Fraggle Rock" housed vulnerable inmates, sex offenders and because of overcrowding, other difficult and disruptive youngsters.
Mounting pressure
He claimed he was unable to work under the mounting pressure of his job, where he regularly had to deal with incidents of bullying, self-harm, fights and verbal abuse.
During his time at Castington, he sought the help of a prison psychologist and a catalogue of incidents forced the prison officer, known only as Mr R, to take stress-related sick leave.
The man claimed that he was refused redundancy and an application for office-based duties was denied.
Frank Rogers of Lees Lloyd Whitley, solicitors acting for the Prison Officers Association, said he believed this was the first successful prison-based, work-related stress claim against the Home Office.
He said: "Mr R has not worked since medical retirement, despite applying for numerous jobs.
"This was a breakdown with lasting consequences for a dedicated officer.
"Inadequate staffing, inappropriate mix of inmates, poor staff support services and generally an under-funded service all contributed to his demise."
Out of court settlement
The case was settled out of court and although the exact details of the payment have not been disclosed, solicitors told the BBC it was more than £100,000.
A Prison Service spokeswoman said: "The case was settled just days before it was due to be heard at an employment tribunal."
Lees Lloyd Witley has between 50 and 100 similar cases waiting to go to employment tribunals.