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The Court of Appeal has held in ICTS (UK) Ltd v Visram that an employee was entitled to be compensated for loss of PHI benefits following his dismissal, when he was unable to return to the same job he had held with his employer before starting a period of sickness absence.

Mr Visram started work at Heathrow Airport with American Airlines (AA) in May 1992.  His contract included a long-term disability benefits plan which provided that benefits would commence 26 weeks after the start of the employee's absence and continue until the earlier date of the employee's return to work, death or retirement.  In October 2012 Mr Visram went on sick leave and two months later his employment transferred from AA to ICTS (UK) Ltd.  Once he had been absent for 26 weeks he expected to receive benefits in accordance with the plan, and when that didn't happen he presented a grievance.  ICTS and the insurer entered into negotiations, following which the insurer agreed to pay the benefits for a year.  At the end of the year Mr Visram was dismissed on grounds of capability.  He brought successful claims for unfair dismissal and disability discrimination.

Both the tribunal and the Employment Appeal Tribunal (EAT) held that the claimant was contractually entitled to benefits under the plan until he returned to his original job, died or retired.  The Court of Appeal agreed reasoning that if the drafters of the benefits plan had wished to say that the benefit would only be payable for so long as an employee was unable to perform any full-time work attracting remuneration they would have done so.

Take note:  The decision in Visram shows how important it is for employers to consider the benefits to which an employee is entitled before coming to a decision to dismiss.  Generally it will be good practice to ensure that there is no obligation on the employer to pay employees under a PHI scheme unless they have received payment from the scheme insurer.