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12 November 2012
Employment Appeal Tribunal (EAT)
Silber J, Mr D J Jenkins OBE and Mr G Lewis
The court in Aspden v Webbs Poultry suggested that, where employers have a permanent health insurance (PHI) scheme providing replacement income for employees absent because of long-term illness, there is an implied term that the employer will not dismiss the employee for ill health if, to do so, would prevent the employee from benefiting from the scheme. Subsequent cases (eg Reda v Flag Ltd) have suggested that such a term should not always be implied.
L was off sick for over three years. Medical evidence suggested there was no prospect of returning to work in the foreseeable future. He was therefore dismissed. At the time of dismissal, he was receiving replacement income under a PHI scheme, which provided benefits up to the age of 60, when occupational pension would become available. The payments stopped on termination of employment but the employers negotiated a cancellation payment from the insurers, which it passed on to L.
L's claims for disability discrimination, age discrimination and unfair dismissal failed. L also complained that the dismissal breached an implied term that he would not be dismissed so as to remove his entitlement to PHI benefit.
L's contract contained an ‘entire agreement' clause (ie a clause stating that the written terms constituted the entire agreement and there were no other terms, express or implied). There was no other evidence suggesting the employers intended to imply such a term. For those reasons, it was held there was no implied term preventing the employers from dismissing L.
In any case, since L had received the cancellation payment, he had received all his benefits under the PHI scheme. For that reason also his claim failed.
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