Death in Service Benefits Recoverable in Full

The family of an employee who died shortly after being dismissed could recover the full value of his death in service benefits as part of the compensation for unfair dismissal and disability discrimination.

In Fox v British Airways, F had been entitled to death in service benefits worth £85,000 (three times salary) under the pension scheme. He was dismissed on capability grounds five days before an operation which he hoped would enable him to return to work. However, he died unexpectedly within three weeks of the operation. His family claimed that his dismissal was unfair and amounted to disability discrimination.

The Court of Appeal agreed with the Employment Appeal Tribunal that the death in service benefits could be recovered in full. 

The loss of the contractual right to the death in service benefit was a real loss suffered by F. He had lost the entitlement to have the benefit paid to his dependants on his death and, in the unusual circumstances of this case, his dependants would be entitled to recover the full value of his death in service benefits if liability for unfair dismissal were established. F’s estate was entitled to be put in the position it would have been in had he not been dismissed when he was. It was virtually certain he would have been in employment at the date of his death and his beneficiaries were therefore entitled to be compensated for the full loss of the death in service benefits. 

Normally you would expect that an employee would only be entitled to recover as compensation the cost of the premium for purchasing equivalent death in service cover. However, because the employee died so soon after dismissal and had not purchased alternative cover, the Court of Appeal in this case decided that the employer would be liable for the full value of the benefit itself if the claims were ultimately successful.