Depressed employee dismissed for ‘incapacity’ is granted appeal

Employee claimed he should be protected under benefits plan carried over in TUPE transfer

A security manager with depression entitled to long-term disability benefits will be allowed to appeal a tribunal that found his dismissal on the grounds of “medical incapacity” was not in breach of his contract.

Mr H Awan was dismissed by security contractor ICTS UK for incapacity. However, the EAT found the firm may have been in breach of TUPE regulations as Awan might have been protected from dismissal on the grounds of illness due to benefits included in a contract he had carried over from a previous employer when his job was transferred to ICTS.

Mrs Justice Simler re-submitted for consideration the question of whether, on a “correct construction of the claimant’s employment contract”, ICTS was prevented from dismissing Awan for incapacity as long as he was entitled to long-term disability benefits. She also cited a lack of evidence presented by the company.

She said: “The tribunal’s conclusion that there was no such implied term means that both the conclusion that [Awan’s] dismissal was fair and that it was a proportionate means of achieving a legitimate aim cannot stand. These conclusions are set aside and the question of fair/unfair dismissal and whether it was justified will have to be remitted.”

Awan began work with American Airlines as a security agent at London Heathrow Airport in 1992. In 2005, he was promoted to the position of international security coordinator.  American Airlines had a group income protection policy with Legal & General (L&G) for the provision of long-term disability benefits to its employees.

Section G of a company booklet – headed “Long-term disability benefits” – made clear American Airlines would meet all administrative costs inherent in running its pension plan and “will also bear the costs of the… long-term disability insurance.”

The booklet, expressly referred to in Awan’s employment contract, said: “Should you be absent from, and unable to, work due to sickness or injury for a continuous period of 26 weeks or more, you will receive a disability income of two-thirds of your base annual salary, less the state invalidity pension. The disability income will commence 26 weeks after the start of your absence. It will continue until the earlier date of your return to work, death or retirement.”

On 28 August 2012, employees were told the security department would be outsourced to ICTS UK. They were told their employment would transfer under TUPE regulations and that their existing terms and conditions of employment and continuity of employment would remain protected by the regulations.

Awan was deemed unfit for work due to depression in October 2012 and remained absent until his eventual dismissal in November 2014. He said he was unable to consider returning to work before he had received further treatment. He had previously had 12 sessions of counselling, was on antidepressant medication and had received a psychiatric assessment.

By 20 December 2016, ICTS had set up a policy with Canada Life to cover payment of long-term disability benefit. However, Canada Life said it would not cover any employee who had been on sick leave on 1 December 2016 unless the employee subsequently returned to work and completed seven consecutive days’ service.

On 26 June 2013, Awan raised a formal grievance about breach of TUPE regulations and unlawful deduction from wages. He said that under his contract of employment with American Airlines, he was entitled to a disability payment amounting to two-thirds of his salary after 26 weeks’ sickness absence.

Following numerous meetings between L&G, Canada Life, American Airlines and Awan about his entitlements and who would provide them, a final meeting was held in September 2014. Awan’s employment was terminated on 28 November 2014.

London Central Employment Tribunal had initially rejected Awan’s case, and found that although Awan’s dismissal for incapacity constituted unfavourable treatment because of something arising as a consequence of his disability, it was still a “proportionate means of achieving a legitimate aim” after the business had not been able to agree on any adjustments that might facilitate his return to work.

Andrew Willis, head of legal at CIPD HR-inform, said the case reminded employers of the importance of considering all the circumstances and contractual rights of employees when they are looking to dismiss them.

He said: “Employers who operate these employment benefits will have to ensure their contractual terms are explicitly and properly drafted to provide them with the ability to end employment when it becomes clear the employee will not return.”

A spokesperson for ICTS UK said: “We are disappointed with the judgment of the EAT. The facts of the case are particularly unique and, we feel, should be distinguished from the established line of cases that relate to long-term disability benefits (as did the Employment Tribunal at first instance). We are considering an appeal to the Court of Appeal."