Could an implied term prevent you from dismissing employees on long term sick leave?

17th December 2018

In Awan v ICTS UK Ltd, Mr Awan was out of work on long term sick leave due to depression. Mr Awan was contractually entitled to long term sickness disability benefits under an insurance policy which his employer had with an insurer. The policy stated employees would benefit from but only while they are an employee of ICTS.

Mr Awan had explained to ICTS UK Ltd (ICTS) that he did not feel he could return to work until he received a certain type of treatment for his depression. ICTS subsequently dismissed Mr Awan on the basis of medical capability. When Mr Awan’s employment was terminated his entitlement to the long term sickness disability benefits ceased as he was no longer an employee of ICTS. Mr Awan brought a claim for disability discrimination and unfair dismissal.

The Employment Tribunal rejected Mr Awan’s claim so he appealed to the Employment Appeal Tribunal (EAT). The EAT held that the purpose of long term sickness disability benefits would be undermined if employers simply dismissed employees when they became unable to attend work due to illness.

Therefore, the EAT held there was an implied term that once an employee has a long term sickness and entitled to long term sickness benefits, the employer cannot be dismissed due to his long term sickness. Therefore the decision to dismiss Mr Awan due to his medical capability was in breach of his contract of employment.

Employer considerations

This judgment raises concerns for employers who have employees on long term sick leave and long term sickness benefits in place. A cautious approach should be taken when considering dismissing an employee on the grounds of medical capability where there are long term sickness benefits in place. Failure to check the position before dismissal may lead to claims for breach of contract, unfair dismissal and disability discrimination.

In order to prevent these issues occurring, employers should: 

  1. ensure contracts of employment limit the ability of employment tribunals finding an implied term in favour of the employee
  2. clarify that the employer will only pay for the long term sickness benefits when the insurer is willing to fund them
  3. discuss the implication of any long term sickness benefits with a legal professional. A member of our employment team would be happy to discuss this with you.


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