In Fox v British Airways Ltd, the EAT has held that the full value of a death-in-service benefit was payable in an unfair dismissal claim brought by the estate of a deceased former employee. An employment tribunal was wrong to confine the award to £350 simply to reflect the cost of lost life assurance cover. The EAT rejected the idea that there is no loss to the deceased where they are not alive to enjoy the benefit.
F was dismissed from work from because BA Ltd considered he was physically incapable. 5 days later he had surgery intended to make him fit for work. However, he died 20 days later aged 44. If he had not been dismissed, he would have been entitled to a contractual death-in-service benefit of over £85,000. F’s father brought a claim on behalf of F’s estate for that sum on the basis that the dismissal had been unfair and/or discriminatory contrary to the Disability Discrimination Act 1995.
A tribunal considered that, assuming that the dismissal was unfair, F’s estate was in effect asking it to have regard not to the loss sustained by F, as required by S. 123 of the Employment Rights Act 1996, but to the loss to the prospective beneficiaries of the death–in-service benefit monies. While the cost of replacing life cover was a reasonably foreseeable loss sustained by F himself, the loss of a payout under that cover was a loss suffered by others. The tribunal found that a small sum of around GBP350 to reflect the cost of life assurance was solely payable. F’s estate appealed.
The EAT allowed the appeal. In its view, F was entitled to a benefit while he was employed. When he was dismissed, he lost that contractual right. Thus, there was a loss sustained by F of the entitlement to have a sum paid to others in the event of his death. That was a real loss upon which a monetary value could be placed. The beneficiaries had no right to it, save for a contingent expectation. But that was no reason for denying compensation to F’s estate as represented by F’s father. The House of Lords’ decision in Pickett v British Rail Engineering was consistent with a conclusion that it is the value to the deceased, at the point of loss, which has to be assessed.
Regarding quantum, appropriate compensation for loss of death-in-service benefits should be sufficient to secure payment on death of the agreed sum. Usually, this will be the cost of the insurance premium for a policy which will, as nearly as possible, provide the payment the deceased was denied by virtue of being dismissed. In the instant case, the sum payable to F’s estate was that which would in the circumstances have been paid to secure a payment of £85,000 on F’s death within the three weeks following his dismissal. In the EAT’s judgment, it was inconceivable that the cost of providing for payment of a lump sum within such a short period would have been any less than the sum itself. However, the EAT noted that it is likely to be rare for there to be no reasonable opportunity for a victim of unfair dismissal or a tortious wrong to purchase life assurance between dismissal and death. In most cases, arguments on mitigating loss would be critical in establishing the amount of compensation. However, that was not appropriate here where F had died so soon after being dismissed in circumstances where his last three weeks of life involved serious medical treatment he was expected to survive.