Mr Visram worked for American Airlines from 1992. His employment contract included a LTDB plan, which provided that the benefit would be payable 26 weeks after sickness absence started and would continue until the ‘earlier date of your return to work, death or retirement’. The LTDB was funded by an insurance policy that would pay two thirds of his salary.
Two months after Visram went on sick leave in 2012, his employment transferred under TUPE to a new employer. After 26 weeks’ absence, Visram expected to receive LTDB. When this didn’t happen, he raised a grievance. The insurer subsequently agreed to pay LTDB for one year only and Visram was dismissed on grounds of capability at the end of that year.
Visram successfully claimed unfair dismissal and disability discrimination. The employment tribunal (ET) found that Visram was contractually entitled to LTDB until he returned to his original job, death or retirement and awarded compensation on the basis that the LTDB would continue until death or retirement.
The employer appealed unsuccessfully to the Employment Appeal Tribunal, which rejected their argument that ‘return to work’ meant return to any full time work with the employer or otherwise. As the meaning of 'return to work’ was ambiguous (return to the same job or to any suitable full time work), the ET had to consider the insurance policy wording. This defined a disabled member as someone ‘incapacitated by illness or injury which prevents him from performing his own occupation’. The ET’s conclusion was therefore correct.
This case highlights the importance of being aware of the precise contractual entitlements of employees in relation to LTDB and of checking the wording of such policies before dismissal. Further, when acquiring a business, employers should take careful note in assessing future liabilities if transferring employees are on long-term sickness absence and in receipt of and/or who have an entitlement to LTDB.