06-12-2018

Employers cannot dismiss employees who are receiving contractual long-term disability benefits for incapability due to an implied term, found the Employment Appeal Tribunal (EAT).

In the case of Awan v ICTS, Mr Awan worked as a security agent for American Airlines at Heathrow Airport. As part of his contract he was entitled to an insured long-term disability benefit plan. The plan outlined that his benefits would stop in the event that he was no longer in employment.

Mr Awan had depression and went on sick leave. The airline then outsourced the security department to ICTS and the employer’s obligations under the disability benefit plan transferred under TUPE. He was then dismissed on account of capability.

The case was brought to a tribunal, which found that there was no impediment to the employer in dismissing him while he was entitled to receive benefits. It held that the dismissal was fair and was not unlawful under disability discrimination. However, the EAT disagreed with this decision.

Writing in Daniel Barnett’s Employment Law Bulletin, Dr John McMullen, partner at Wrigleys Solicitors, said: “On a proper construction of the contract, a term should be implied that ‘once the employee has become entitled to payment of disability income due under the long-term disability plan, the employer will not dismiss him on the grounds of his continuing incapacity to work.’ That term operated to limit the express contractual right to terminate on notice if it would frustrate the contractual entitlement to long term disability benefits.”

He highlighted that, although dismissal in breach of contract is not necessarily unfair, in this case the contractual position was very relevant. This is because it was part of the circumstances against which the reasonableness of the employer’s actions were judged.

“Therefore the tribunal’s conclusion that the employee’s dismissal was fair, and that it was a proportionate means of achieving a legitimate aim, could not stand. These questions were remitted to a fresh tribunal for reconsideration,” said McMullen.


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