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Question:	Can an employee on permanent health insurance be dismissed?
Answer:	Many employers who can afford it give employees the benefit of Permanent Health Insurance (PHI) for employees who go off on long term sickness absence. Ordinarily, long term sickness absence can be a potentially fair reason to bring someone’s employment to an end. However the dismissal of an employee benefiting from PHI may constitute a breach of contract, even if the appropriate notice is given. This was the Court’s view in Aspden v Webbs Poultry and Meat Group (Holdings) Ltd. Qualifying employees would get ¾’s of their salary until death or retirement, provided that he or she remained in the company’s employment. The judge held that even though the employee’s contract expressly provided for dismissal for prolonged incapacity, there was an implied contractual term to the effect that, the employer would not terminate the contract while the employee was too sick to work, and was receiving PHI. This could result in the absurd situation that if someone goes on long term sickness during their probationary period and qualifies for PHI, the employer may be stuck with them as an ‘employee’ on the books for an indefinite period. This is something employers may want to think about carefully before introducing a PHI scheme or before terminating the employment of someone already getting PHI. Furthermore, if a pension scheme provides for an enhanced pension on ill health retirement, the employer will be expected to take reasonable steps to ascertain whether a sick employee is entitled to that benefit before dismissing him. (see First West Yorkshire t-a First Leeds v Haigh EAT 2007). See also our page on disability discrimination Last Reviewed: July 2010.
James Carmody Employment Solicitor Reculver Solicitors 12-16 Clerkenwell Road London EC1M 5PQ www.reculversolicitors.co.uk info@reculversolicitors.co.uk Tel 0207 324 6271 Regulated by the Solicitors Regulation Authority © Reculver Solicitors. 2005-