Post Termination Issues: What do employers need to consider?
Chris Dobbs looks at post termination issues, obligations and restrictions.
PHI provides employees with pay during long term sickness or incapacity. Policies can define incapacity differently. Some policies define it as an employee's inability to return to their actual job. Some policies define it as an inability to return to any job. Sometimes the courts get involved if the parties don't agree on the meaning of the policy terms, as was the case in ICTS v Visram.
ICTS v Visram
The employee worked at Heathrow Airport. He had a contractual PHI plan. Benefits would kick in 26 weeks after the start of absence and continue until 'the earlier date of [his] return to work, death or retirement'. The employee was entitled to benefits if he was sick and prevented from performing 'his own occupation'.
The definition of being ‘able to return to work’
The employee went off sick. He raised a grievance when benefits did not kick in after 26 weeks. He was eventually dismissed for capability. He won his unfair dismissal and disability discrimination claims. The question was whether his compensation should include the value of any benefits he would have received under the PHI plan. The employer argued that his benefits stopped when he was able to return to any employment, not his actual job.
PHI until death or retirement
The employment tribunal said the policy benefits stopped when the employee was able to return to his actual job. As he couldn’t return to that job, he was entitled compensation to reflect what he would have been paid in PHI until his death or retirement.
Employment Appeal Tribunal
The Employment Appeal Tribunal agreed. They said the employment tribunal had looked at the policy wording and decided that the word 'return' meant going back to his actual job with his original employer, not any job. They were entitled to make this decision on the policy wording.
Paul Burton, Head of Employment says “Clarity is key. It is important to be very clear in your wording of any PHI policy, as financial consequences of an unclear policy can be very large. If you would like one of our team to take a look at your contracts, or have a query for us, please don’t hesitate to get in touch.”
At Frettens, all of our solicitors offer a free initial meeting or chat on the phone to answer your questions. If this article raises issues for you or your business, please call us on 01202 499255 and the Employment team will be happy to discuss it with you.
