Briscoe v Lubrizol Ltd.

An employer providing disability benefits through an identified insurance scheme may incorporate the policy’s definition of disablement, despite an inaccurate summary in its employee handbook. An implied term prevents dismissal merely to deprive a sick employee of accrued or accruing benefits. It does not prevent dismissal for good cause, including the employee’s repudiatory breach.

Repudiation is assessed objectively. Conduct justifies summary dismissal where it fundamentally undermines the trust and confidence inherent in the employment relationship. Repeated failure to obey reasonable instructions to attend or communicate about a prolonged absence may satisfy that standard. A separate warning of dismissal is not invariably required where the employee already knows that termination is under consideration.

The claimant was employed by the defendant in heavy manual work and was a member of its long-term disability scheme. The employee handbook described full disability as inability to follow any occupation, while the underlying insurance policy required inability to perform the employee’s normal occupation. The claimant ceased work in 1990. The insurers rejected his claim, although it was later agreed for the litigation that he had remained unable to perform his normal occupation.

Hunt J held that the claimant was entitled to benefits until 3 June 1992, when the defendant lawfully dismissed him following his failure to attend a meeting or respond to requests for contact. The claimant appealed, alleging wrongful dismissal and a continuing entitlement to benefits. The defendant cross-appealed against the award of benefits. The principal questions were which definition of disablement governed and whether the claimant’s conduct justified summary dismissal.

1. Disposition. By a majority comprising Ward LJ and Bodey J, the claimant’s appeal was dismissed. Potter LJ dissented on the lawfulness of the dismissal. All three members of the court dismissed the defendant’s cross-appeal.
2. Governing definition of disability. The court unanimously held that the insurance policy predominated over the handbook. The contractual intention was to give employees the benefits of the identified Lubrizol Continuous Disability Scheme. References in the handbook to the scheme, the insurers and their payment of benefits showed that the policy governed entitlement. The claimant therefore needed to establish inability to perform his normal occupation, rather than inability to undertake any occupation.
3. Restriction upon dismissal. Ward LJ held that an employer must not terminate employment as a means of removing an employee’s entitlement to disability benefits. The implied restriction does not prevent dismissal for good cause, including gross misconduct or, more generally, repudiatory breach. Gross misconduct is a form of repudiatory conduct rather than the exclusive permissible ground of dismissal.
4. Repudiatory conduct. The question was whether the employee’s conduct, viewed objectively, would lead a reasonable person to conclude that he no longer intended to fulfil the employment contract. Conduct justifying summary dismissal must fundamentally undermine the trust and confidence inherent in that contract.
5. Application. Ward LJ and Bodey J held that the claimant’s repeated failure to attend a reasonably required meeting or respond to three requests for contact, against the background of his prolonged absence, justified the judge’s conclusion that he had repudiated the contract. He knew that termination had been raised previously. A further express warning was unnecessary. Any failure to warn related more closely to fairness than to contractual lawfulness.
6. Dissent. Potter LJ considered that the failures to attend and communicate, without a clear warning of their consequences, did not objectively amount to gross misconduct or repudiation. He would have allowed the appeal for wrongful dismissal.
7. Cross-appeal. The cross-appeal was dismissed because the case had proceeded below on the basis that the defendant would pay benefits if the claimant satisfied the governing definition. It was not fair to reverse the award on a different basis which had not been properly advanced at trial.

1. Court of Appeal (Civil Division): The claimant’s appeal was dismissed by a majority, Potter LJ dissenting. The defendant’s cross-appeal was dismissed unanimously: [2002] EWCA Civ 508.
2. Queen’s Bench Division: Hunt J held on 20 October 2000 that the claimant was entitled to disability benefits until his lawful dismissal on 3 June 1992. Judgment was entered for £7,117.13 inclusive of interest, with the pension-loss assessment referred to a district judge.