Implied term prevented employer dismissing employee on long-term disability benefits

A recent case in the Employment Appeal Tribunal has provided a useful reminder of the cautious approach needed by employers when dismissing an employee who is absent due to long term ill health.

In Awan v ICTS Ltd, Mr Awan was employed under a contract which gave him both contractual sick pay and a long-term disability benefit.  Often referred to as Permanent Health Insurance, these types of benefit tend to pay out via an insurer when an employee has exhausted their entitlement under a company sick pay scheme and/or SSP.

 Mr Awan had an extended period off work due to depressionand was showing no signs of improvement.  He and his employer were unable to agree on any adjustments which might help him back to work and his employer decided that his employment should end because he was permanently incapable of carrying out his role.  However, by this time, Mr Awan had started toreceive benefits under the company’s long-term disability benefit plan. Mr Awan claimed unfair dismissal and discrimination arising from his disability under the Equality Act.  An employer can argue that this type of discrimination is not unlawful if it is able to say that the actions can be objectively justified in the circumstances. 

The Employment Tribunal agreed with ICTS, but Mr Awanappealed and the Employment Appeal Tribunal disagreed.

The EAT was clear that, if an employer dismissed an employee whilst they were in receipt of this type of benefit, it was contrary to the whole purpose of the benefit and would frustrate any claim under thescheme.  The EAT made clear that a term could be implied into Mr Awan’s contract, meaning that once he became entitled to payment under such a scheme, he wouldn’t be dismissed on the grounds of his continued incapacity to work.

So, what do employer’s need to do?  Well, any dismissalon the grounds of an employee’s long term ill health needs to be handled carefully.  Medical evidence will nearly always need to be considered, but employers also need to consider the wider picture.  As well as the right to any benefits under a long-term benefit, employers would also need to consider ways in which they could retain the employee, such as reasonable adjustments and/or redeployment.

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