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The EAT implied a contractual term restricting the employer’s right to dismiss an employee entitled under such a scheme, and said breach of the term would be very relevant in an unfair dismissal claim.

The scheme was backed by insurance companies, but the claimant’s disability payments were being met by the employer because his department had been outsourced and the new insurance company refused to accept liability.

The EAT held the employer was contractually obliged to make the disability payments to the claimant, and also there was an implied term under his employment contract that once an employee became entitled to payment under the disability plan, the employer would not dismiss him on grounds of continuing incapacity. Whether such a term should be implied would depend on the terms of the particular contract – eg it might be negated by very clear express terms.

Given the dismissal was now found to be in breach of contract, it was for the tribunal to decide whether there was unfair dismissal, and whether the dismissal was a proportionate means of achieving a legitimate aim so as to defeat the claim under s.15 Equality Act. The fact that the dismissal was a breach of contract would not be conclusive but would be ‘very relevant indeed’ in deciding whether there was unfair dismissal.

The case is Awan v ICTS UK Ltd, EAT, 2018

More: Illness and unfair dismissal>Long-term disability benefits schemes.