The EAT has upheld a Tribunal's decision that less favorable treatment suffered by a fixed-term employee as a result of a term in a PHI policy that restricted fixed-term employees from receiving the benefit if their contracts expired before the end of the 26 week qualifying period was not caused by the employer but the insurer. 

Hall v Xerox UK Ltd

Employees of Xerox were entitled to permanent health insurance ("PHI") under the terms of a policy between Xerox and Unum if they had been off work for over 26 weeks as a result of a qualifying injury.  Under the insurance policy, fixed-term employees would not be entitled to PHI where their fixed-term contracts expired before the end of the 26 week qualifying period.  The employment contracts provided that the PHI benefit was governed by the terms of the underlying insurance policy and subject to the acceptance of the claim by Unum, and that Xerox was only liable to make payments to the employee under the scheme if payment had been received by Xerox from Unum for that purpose.

Mr. Hall worked for Xerox under a succession of fixed term contracts.  In April 2012, he suffered a work-related injury.  His contract at the time was due to expire in July 2012 but was subsequently extended until July 2013.  Nonetheless, Unum rejected Mr. Hall's claim for PHI benefit as the relevant contract expired before the end of the 26 week qualifying period.  He brought a claim for less favorable treatment on the grounds of his fixed-term status.

The Tribunal dismissed the claim.  It found that whilst Mr. Hall was treated less favorably than permanent employees, that was not caused by Xerox's act or deliberate failure to act, it was a decision made by Unum. The Employment Judge also considered that had the less favorable treatment been committed by Xerox, it would have been justified as there was no suitable alternative policy available which would not have disadvantaged fixed term employees. 

Mr. Hall appealed to the EAT.

EAT decision

The EAT dismissed the appeal finding that the Tribunal was entitled to conclude that Xerox did not cause the detriment.  Mr. Hall argued that the less favorable treatment was caused by Xerox's "act" of granting a benefit without taking the steps to ensure that the benefit would be provided in a way which did not discriminate between fixed-term and permanent employees.  The EAT rejected this argument holding that a judge has to come to a "sensible, practical or (as has sometimes been termed) robust" view in identifying the cause of the less favorable treatment and that it is unhelpful to include every possible cause of a later consequence.  The EAT accepted that the Tribunal was entitled to conclude that the reason why Mr. Hall did not get the benefit was because Unum refused to pay Xerox.  This was Unum's act, not Xerox's.

Mr. Hall also argued Unum was acting as Xerox's agent but the EAT rejected this argument.  There was a clear distinction between a commercial provider of services contracted to provided these services and an agent acting on behalf of Xerox.

The EAT also held that the Tribunal was entitled to conclude on the evidence that if the less favorable treatment had been conducted by Xerox, it was justified.  The Employment Judge was entitled to form a view on the evidence before it that no other insurer would have provided cover.


This is a helpful decision for employers.  However, it should not be relied upon as establishing that employers can never be responsible for potentially discriminatory terms in underlying contracts with benefit providers.  Employers who offer benefits which may have a less favorable effect on fixed-term employees or are otherwise discriminatory should ensure that the detriment can be objectively justified.  The EAT appeared to accept that Xerox had a legitimate aim "to provide employees with PHI at no greater expense than the costs of an annual premium" but did not explore this in detail.