• Dismissal of employee on long-term disability benefits Restricted by Implied Term

    The EAT has decided that an employment tribunal erred in finding that the dismissal of a disabled employee on the ground of capability during a time when he was entitled to long-term disability benefits was fair. The tribunal had wrongly rejected the employee’s argument that there was an implied contractual term that prevented his employer from dismissing him in these circumstances.

    A commenced employment with American Airlines as a Security Agent at Heathrow Airport on 11 April 1992. He was later promoted to International Security Coordinator. His contract of employment entitled him to both contractual sick pay and the benefit of a long-term disability benefit plan. On 14 October 2012, A was certified as unfit to work because of depression. On 1 December, his employment (and that of 17 other Lead Security Agents/International Security Coordinators) was transferred to ICTS UK Ltd. A remained off sick until the termination of his employment on 28 November 2014 on the basis that he was permanently incapable of carrying out his role. His symptoms had not improved and the parties could not agree on any adjustments that might facilitate his return to work. By this time, he had been in receipt of payments under the long-term disability benefits plan.

    A brought proceedings before an employment tribunal complaining that ICTS UK Ltd’s decision to dismiss him while he was still entitled to long-term disability benefits was unfair and was also an act of unlawful discrimination because of something arising from his disability under S.15 of the Equality Act 2010. It was common ground that A was at all material times a disabled person for the purposes of the EqA. It was also common ground that A was dismissed for a reason relating to capability and that his dismissal was because of something arising from his disability. The tribunal found that ICTS UK Ltd had acted reasonably in dismissing A for a reason relating to capability, and that his dismissal was a proportionate means of achieving a legitimate aim for the purpose of S.15 EqA. It rejected A’s argument that there was an implied term in his contract of employment restricting ICTS UK Ltd’s power to dismiss him because of permanent incapability at a time when he was entitled to long-term disability benefits. A appealed against the tribunal’s decision arguing that, among other things, the tribunal had misconstrued the contract of employment by finding that no term was to be implied.

    The EAT held that, on a proper construction of the contract, it was contrary to the functioning of the long-term disability plan, and to its purpose, to permit ICTS UK Ltd to exercise the contractual power to dismiss to deny A the very benefits which the plan envisaged would be paid. It held that a term could be implied into A’s contract, whether on the ‘officious bystander’ test or the business efficacy test, to provide that once an employee becomes entitled to payment of disability income due under the long-term disability plan, the employer will not dismiss him on the grounds of his continuing incapacity to work. Such a term was capable of clear expression, was reasonable in the circumstances and operated to limit (rather than contradict) the express contractual right to terminate on notice by preventing the exercise of that right in circumstances where it would frustrate the entitlement to long-term disability benefits expressly provided for by the contract. The EAT held that the tribunal’s erroneous conclusion that there was no such implied term meant that its finding that A’s dismissal was fair and a proportionate means of achieving a legitimate aim could not stand.


    Copyright Thomson Reuters

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