Pay awards have settled around the 2.5% mark this...
PHI benefits and long-term disability
ICTS (UK) Ltd v Visram
An employee was rightly compensated for loss of entitlement to benefits under a PHI policy when he was unable to ‘return to work’ following sickness absence. The ‘return to work’ was a return to the work he had been doing when he went off sick, not a return to any work.
Mr Visram’s contract entitled him to the benefit of an insurance-based ill-health scheme which would pay two-thirds of his salary during an illness. The relevant policy wording confirmed that payment would ‘continue until the earlier date of your return to work, death or retirement’. Entitlement under the scheme was conditional on Mr Visram remaining employed. Mr Visram went off sick with work-related stress and depression. While he was off sick, the ownership of the business changed hands and his employment TUPE-transferred to ICTS. Mr Visram’s employment was terminated by ICTS on capability grounds, due to his prolonged absence. His tribunal claims for unfair dismissal and disability discrimination were successful. As to compensation, the tribunal held that ICTS was contractually obliged to continue to provide Mr Visram with the long-term disability benefits up to such time as he became fit enough to return to the position he had held before he went on sick leave and ordered that it be paid monthly until that time or until death or retirement. ICTS appealed to the EAT, arguing that that it was only obliged to continue to provide Mr Visram with the benefits until such time as he became fit enough to return to work in any suitable full-time position. Mr Visram counter appealed saying that he should have been awarded aggravated damages because ICTS subjected him and his family to covert surveillance which caused them all to be anxious.
Dismissing the appeal, the EAT held that ‘return to work’ meant return to the work from which Mr Visram had gone sick. There was no prospect that Mr Visram would ever be able to do that and so the tribunal had been correct in deciding that he was entitled to be compensated for loss of benefits until death or retirement.
The appeal in relation to aggravated damages also succeeded and this was sent back to the tribunal to reconsider and to properly explain why it had not awarded them if that was its decision.
Link to judgment: https://www.bailii.org/uk/cases/UKEAT/2019/0133_18_2703.html
This was a costly lesson for this employer and is another example of where the courts have found in an employee’s favour when determining entitlement to contractual benefits, in circumstances where the policy document covering the entitlement was ambiguously drafted. Always ensure that every angle of an employee’s insurances and benefits are considered before taking any action, particularly in relation to a disabled employee who is receiving long-term disability benefits. Remember that in the absence of an express term in the contract, there is an implied term that those in receipt of PHI will not be dismissed if this will affect their right to this benefit.
The decision also highlights:
- that in a TUPE transfer, all of an employee’s rights under their employment contract transfer to the incoming employer - it is critical that if you are the transferee employer, you identify what those rights are, and
- the possible risk that covert surveillance can lead to an award of aggravated damages.