Bainbridge v Circuit Foil UK Ltd [1997] IRLR 305
Adin v Sedco Forex International Resources Ltd [1997] IRLR 280
Two recent rulings , one by the Court of Appeal in England the other from the Court of Session in Scotland, have foiled attempts by employers to prevent employees from receiving contractual sickness and disabilities benefits.
The Court of Appeal ruled in Bainbridge that a sick pay scheme incorporated in an employee's contract of employment continues until the employee's contract is varied or notice of termination of the scheme is given. In Adin the Court of Session ruled that if disability benefits are provided under a contract of employment, employers cannot prevent an employee benefiting from the scheme, if the claim is well founded, by dismissing them.
In the first case Mr Bainbridge's contract of employment incorporated short term and long term sick pay schemes supported by an insurance policy paid for by the employers. In 1985 he developed industrial dermatitis and was unable to return to work.
He was paid in line with the short term sick pay scheme and then paid the amount he would have received under the long term scheme until March 1993 when he was made redundant. He was then told that no further payments would be made.
His employers said that he was not contractually entitled to payments under the long term sick pay scheme because they had failed to pay the insurance premiums in March 1992 and this terminated the scheme. Mr Bainbridge was not informed of this until he was made redundant.
The Court of Appeal held that Mr Bainbridge was covered by the sick pay schemes until he was notified to the contrary. His rights under his contract of employment continued until notice was given that his contract had been varied and that the scheme was terminated. Mr Bainbridge remained entitled to payment under the scheme.
In the second case, Mr Adin worked on the North Sea. In January 1992 he became ill with stress and was admitted to hospital. At the end of March 1992 the Personnel Manager phoned him and said in the light of his condition he would not be required to take up employment as a Rig Manager. In May he received a letter of termination.
His contract included benefits provided under short term and long term disability plans, details of which were set out in a guide for employees. Mr Adin subsequently claimed that he was disabled from working from November 1992 until December 1994 and that he was entitled to payment of disability benefits under the contract of employment for that period. His employers said he was not entitled and that his employment was not terminated due to his ill health.
The Court of Session commented that the provisions dealing with benefits for disability are "part of a remuneration package of the employee under the contract, not some form of charity on the part of the employer". They concluded that the right to the disability benefit is established by the combination of the contract terms and the unfitness of the employee and, once the right is established, the benefit is payable.
The court ruled that, as a matter of construction of the contract, the employers were not entitled to sidestep Mr Adin's claim to benefit by dismissing him during the short term benefit period.