Fox v British Airways plc 2012 UKEAT/0033/12

This is a most unusual case. Mr Fox, an employee of British Airways, suffered a back condition and was off work on long term sickness absence. He was dismissed on the grounds of capability 5 days before having surgery which he hoped would allow him to return to work. He then died unexpectedly around 3 weeks after the surgery. During his employment he was entitled to a death‑in‑service benefit of 3‑times his salary (£85,000). As he was not in employment at the date of his death his dependants did not receive any payment.

However, on appeal to the EAT it was held that his dependants could claim the loss of the death‑in‑service benefit which would have been provided had he died during his employment. Where he died so shortly after his dismissal the loss amounted to the full sum that would have been payable on death (£85,000) and not just the premium required to continue his life insurance cover at the appropriate level.

The EAT recognised that the usual approach to calculating compensation for loss of insured benefit would involve awarding the amount of the premium required to secure a similar level of cover. However, in this case the cost of providing cover for a lump sum which would have to be paid almost immediately would be the sum itself. BA did not raise any arguments as to mitigation of loss given that Mr Fox died so soon after his dismissal following serious medical treatment. The case will proceed to a full merits hearing but if disability discrimination is proved or unfair dismissal established then his dependants may be entitled to compensation for this loss equivalent to 3 years’ pay of £85,000.

Key point: This loss of death‑in‑service benefit was a real loss suffered by the former employee.