In ICTS (UK) Limited v Visram, the Employment Appeal tribunal (EAT) was required to decide whether Mr Visram’s entitlement to long term disability benefit should cease when he was able to take up any form of paid employment, or whether ‘return to work’ should be construed literally as the point at which he would be able to return to the specific work he had undertaken whilst employed.
In brief, Mr Visram had been dismissed on incapacity grounds in August 2014 following a lengthy absence from work due to work-related stress and depression. His contract of employment stated that he was entitled to receive long term disability benefit, subject to meeting the conditions of the benefit scheme. His contract referred to the employer’s “Employee, Retirement, Death and Disability Plans” booklet for more information.
The booklet made clear that the disability benefit was covered via insurance, which was provided by Legal and General. The benefit was stated to “Continue until the earlier of your return to work, death or retirement”.
The insurance policy stated that disability benefit would be paid in the event that an employee was “Incapacitated by an illness or injury which prevents him from performing his own occupation”. “Own occupation” was defined as “The essential duties of …. his occupation immediately prior” to the absence.
The Employment Tribunal concluded that the documentation should be construed so as to entitle Mr Visram to the disability benefit until he was able to return to the specific job he had undertaken before he commenced long term sickness absence.
ICTS appealed and argued that the Employment Tribunal had interpreted the documentation incorrectly, as ‘return to work’ should be construed as when Mr Visram was able to engage in suitable full time employment.
The EAT disagreed. Dismissing the appeal, the EAT found that the Employment Tribunal was entitled to reach its conclusion that in the circumstances ‘return to work’ meant the specific job Mr Visram had undertaken prior to his sickness absence. The EAT remitted the claim to the Employment Tribunal to determine the amount of compensation due to Mr Visram.
The EAT’s decision is likely to have far reaching consequences for ICTS, as from the evidence available, Mr Visram will never be able to perform his previous role. As a result, he could be entitled to compensation (2/3 of his annual salary) until his death or retirement.
So, what can employers do to avoid this situation if they want to offer a disability benefit?
It should be remembered that the main purpose of long term disability benefit schemes is to provide income protection for employees who are unable to work due to ill health. If, at the first sign of ill health, employers seek to terminate employment, the Tribunal is likely to scrutinise the provision of the benefit very carefully.
Employers may want to take steps such as:
Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.