Unfair Dismissal : Implied Term : Variation : Construction of Term : Disability Discrimination
1. This appeal raises the question whether it is fair and/or a proportionate means of achieving a legitimate aim for an employer to dismiss an employee by reason of permanent incapability at a time when an entitlement to long-term disability benefits (whether or not underpinned by an insurance policy) has accrued or is accruing. The Employment Tribunal held that it was both fair and proportionate to do so, having rejected the Claimant’s case that there was an implied term in his contract of employment restricting his employer’s power to dismiss in those circumstances.
2. In particular, it held:
(i) the Respondent was contractually obliged to pay the Claimant long-term disability benefits while he remained employed;
(ii) there was no implied term in his contract preventing the Respondent from dismissing him for incapability while he was entitled to receive such benefits;
(iii) the continued employment of the Claimant would have caused the Respondent operational difficulties;
(iv) the Respondent acted reasonably in dismissing the Claimant for incapacity so that his dismissal was fair;
(v) the Claimant’s dismissal was a proportionate means of achieving a legitimate aim so that there was no unlawful disability discrimination under s.15 Equality Act 2010.
3. The Claimant appealed those conclusions, contending (among other things) that the Employment Tribunal misconstrued the contract of employment by finding that no term was to be implied. The Employment Appeal Tribunal allowed the appeal. It held:
(i) On a proper construction of the contract, it is contrary to the functioning of the long-term disability plan, and to its purpose, to permit the Respondent to exercise the contractual power to dismiss so as to deny the Claimant the very benefits which the plan envisages will be paid. A term can be implied whether on the officious bystander or the business efficacy tests of implied contractual incorporation that ‘once the employee has become entitled to payment of disability income due under the long-term disability plan, the employer will not dismiss him on the grounds of his continuing incapacity to work.’ That term is capable of clear expression, reasonable in the particular circumstances and operates to limit (rather than contradict) the express contractual right to terminate on notice by preventing the exercise of that right in circumstances where it would frustrate altogether the entitlement to long term disability benefits expressly provided for by the contract.
(ii) Dismissal in breach of contract is not necessarily unfair but the contractual position is relevant as part of the circumstances against which the reasonableness of the Respondent’s actions fall to be judged. An implied term that there will be no dismissal for incapacity in the circumstances identified falls at the ‘very relevant indeed’ end of the spectrum of relevance. The Tribunal’s conclusion that there was no such implied term means that both the conclusion that the Claimant’s dismissal was fair and that it was a proportionate means of achieving a legitimate aim cannot stand, as the Respondent conceded. These conclusions are set aside and the question of fair/unfair dismissal and whether it was justified will have to be remitted.
(iii) The Employment Tribunal concluded that the Respondent would have dismissed in any event for the same reasons. The mere fact that the dismissal was not to avoid making payments does not entail that the Respondent would have dismissed in any event had it correctly appreciated its contractual obligations. Although this question involved a degree of speculation or prediction about what would have occurred in the counterfactual scenario posited, it was for the Respondent to adduce any relevant evidence relied on as to what it would have done (in terms of dismissal) if it thought the contract obliged it to continue making long-term disability benefit payments while the Claimant was employed. It adduced no such evidence and the Tribunal’s finding was accordingly unsupported by any evidence and must be set aside.
Citations:
[2018] UKEAT 0087 – 18 – 2311
Links:
Jurisdiction:
England and Wales
Employment
Updated: 14 July 2022; Ref: scu.630733
