Long-term disability and benefits

Mr Awan's employment contract included provision to receive 'disability benefits' in the event of his absence from work for 26 weeks or more due to ill health. The benefit was equal to approximately two thirds of his annual salary.

Mr Awan was dismissed on account of his long term absence whilst he should have been in receipt of the disability benefit. He brought proceedings for unfair dismissal and disability discrimination in the employment tribunal and argued that there should be an implied term that an employer will not dismiss an employee for incapability if that would thwart entitlement to long-term disability benefits. The employment tribunal disagreed and found his employer had acted reasonably and the dismissal was fair and that the dismissal was a proportionate means of achieving a legitimate aim so that there was no unlawful disability discrimination under the Equality Act 2010.

However, on appeal, the Employment Appeal Tribunal in Awan v ICTS found that ere should be an implied term that that his employer would not dismiss him for incapacity while he was contractually entitled to the payment of benefits under a long-term disability plan.

This clearly can create difficulties for employers, particularly if the disability benefit has not been underwritten by insurance, as the employer may find themselves contractually liable to pay a disability benefit and struggle to dismiss the employee in receipt of the same.

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