作者
kathryn clapp

Kathryn Clapp

高级专业支持律师

Read More
Shireen Shaikh

Shireen Shaikh

高级专业支持律师

Read More
作者
kathryn clapp

Kathryn Clapp

高级专业支持律师

Read More
Shireen Shaikh

Shireen Shaikh

高级专业支持律师

Read More

2020年3月16日

Employers beware of direct liability for long-term disability benefit

  • IN-DEPTH ANALYSIS

ICTS (UK) Limited v Visram

Why care?

Where employers provide long-term disability benefit, also known as permanent health insurance (PHI), they use a third-party provider to provide the benefit. If, however, the insurer fails to pay up for any reason, the employer may find itself directly liable for providing the benefit. This is something which can be very costly since such schemes often provide for two thirds of salary to be paid to the disabled employee. The case below highlights the importance of the employer specifying clearly in the employment contract if it wants to limit the circumstances in which the benefit will be payable. A common question that often arises is, does the employee cease to be entitled to the benefit once they can do any kind of work, or is it only when they are able to return to their old job that they cease to be entitled? 

The case

Mr Visram was employed as a security co-ordinator at Heathrow for American Airlines from 1992; his employment transferred under TUPE to ICTS (UK) Limited in April 2013. He was off sick from October 2012 until August 2014 (when he was dismissed for ill-health) and his application for long-term disability benefit was rejected. The old insurer (relevant to his employment with American Airlines) refused to provide cover on the basis that Mr Visram's claim for the benefit did not crystallize until after he had transferred under TUPE. Essentially, they said it was the problem for the new employer and the new insurer. ICTS' insurer, Canada Life, refused cover on the basis that Mr Visram's illness had occurred before the inception of its policy.

Mr Visram brought successful claims in the employment tribunal for unfair dismissal and disability discrimination. An employment tribunal found that ICTS had a primary obligation to pay long-term disability benefit to Mr Visram; his contract provided that it would be paid so long as he was "absent from and unable to work due to sickness or injury for a continuous period of 26 weeks or more". Did "unable to work" mean unable to work in any capacity at all, or did it have the narrower meaning of being unable to work in his specific occupation? The employment tribunal and EAT held it meant the latter and the Court of Appeal agreed. Had the drafters of the relevant plan wished to say that the benefit would only be payable for so long as the individual was able to perform any full time remunerative employment, it would have been easy enough to say so.

What to take away

In order to avoid becoming directly liable for the benefit, employers should make clear that cover is only provided subject to the terms of the relevant insurance policy in force. Where contracts refer to the benefit being provided, this should accurately reflect the terms of cover and make clear whether cover will lapse if the employee is able to perform some work, even if not their old job.

Call To Action Arrow Image

Latest insights in your inbox

Subscribe to newsletters on topics relevant to you.

Subscribe
Subscribe

Related Insights

colleagues talking at computer
就业、养老金和流动性

Bringing employees back to work: the Chancellor announces furlough scheme flexibility from 1 July

2020年6月16日
QUICK READ

作者 Paul Callaghan 以及 Kathryn Clapp

点击此处了解更多
Chairs around table
就业、养老金和流动性

Law at Work - Hot topics May 2020

2020年5月20日
QUICK READ

作者 Kathryn Clapp 以及 Shireen Shaikh

点击此处了解更多
colleagues talking at computer
就业、养老金和流动性

Hot topics - March 2020

2020年3月18日
IN-DEPTH ANALYSIS

作者 Kathryn Clapp 以及 Shireen Shaikh

点击此处了解更多