Employee entitled to long-term disability benefits until he could return to the same job

An employee who was dismissed whilst receiving disability benefits would have been entitled to receive those benefits until he was able to return to the job he held when he went on sick leave.  Compensation for unfair dismissal and disability discrimination should therefore be calculated on that basis. 

Facts

In ICTS (UK) Limited v Visram, Mr Visram was on long-term sick leave and receiving benefits under an insurance-backed permanent health insurance policy when he was dismissed on grounds of incapacity.  Details of the benefit were included in a booklet which was referred to in his employment contract. The booklet stated that he was entitled to benefits until the earlier of his return to work, death or retirement.

He successfully claimed unfair dismissal and disability discrimination. When the tribunal came to decide compensation, his employer argued that his entitlement to disability benefits would have ceased when he was able to return to any full-time suitable work. Compensation should therefore be assessed on that basis. The employment tribunal disagreed. It considered the terms of the underlying insurance policy and ruled that he was contractually entitled to benefits until his return to his original job. As the medical evidence indicated that he would never be able to return to that job, the employment tribunal awarded compensation on the basis that he would have been entitled to benefits until his death or retirement.  

The employer appealed, arguing that “return to work” in the booklet meant return to any suitable work he was able to carry out, whether for ICTS or otherwise. In addition, the tribunal should not have relied on the terms of the policy to construe the booklet.  

Decision

The Employment Appeal Tribunal dismissed the employer’s appeal.  “Return to work” meant going back to work for the same employer.  It was not clear from the booklet whether this meant returning to the same job or any suitable full-time paid work. To resolve this, the employment tribunal had no choice but to resort to the policy which made it clear that he was entitled to benefits for so long as he was unable to do the job he was doing when he went on sick leave.   

Implications

The case provides helpful guidance on what “returning to work” means - it means returning to work for the same employer. However, that will not necessarily mean returning to the same job with that employer.  Where the position in not clear from the contract or employee handbook, a tribunal may look to the terms of the underlying insurance policy to help it interpret the employee’s entitlement.   

Employers that provide long-term disability benefits should ensure that details provided in contracts and handbooks are clear so as to avoid misunderstandings and disputes about benefit entitlements. Where the scheme is insurance-backed, they should also ensure that their documents accurately reflect the terms of the underlying insurance policy.