PHI and Dismissal

The Employment Appeal Tribunal (EAT) has held that an employer was in breach of an implied term when it dismissed an employee for incapacity whilst he was contractually entitled to long-term disability benefits.

The EAT held that a term could be implied into the employment contract that, once the employee has become entitled to payment of long-term disability benefits, the employer will not dismiss him on the grounds of his continuing incapacity to work.

This confirms previous case law and whilst employers should continue to include a contractual right to terminate the contract notwithstanding an entitlement to PHI, in view of the potential questions about the enforceability of such a clause, legal advice should be sought before dismissing an employee who is entitled to long-term disability benefits or PHI.

(Awan v ICTS UK Ltd)