Pioneer Technology (UK) Ltd. v Jowitt

The Court of Appeal held that the employer's handbook clause (clause 5.3) independently created a contractual entitlement to long-term disability payments and did not incorporate the insurer's policy terms. The phrase "unable to work" in clause 5.3 was construed to mean that, after 26 weeks' certified absence, an employee is entitled to payments only if there is no continuous remunerative full-time work which they can realistically be expected to do. Because the factual question whether the respondent met that test had not been determined, the court allowed the appeal in part and remitted that issue to an Employment Tribunal for factual determination.

This appeal arose from a dispute over an employer handbook provision (clause 5.3) promising two thirds of normal pay "for as long as [employees are] unable to work" after 26 weeks' absence. The respondent, a technician rendered permanently unable to continue in his pre-accident job by a cervical disc lesion, claimed that his employer had made unauthorised deductions by failing to pay under that provision. The employer argued (1) that the handbook provision incorporated the terms of the insurer's policy, which limited cover, and (2) alternatively that "unable to work" meant unable to do the pre-accident job.

The Employment Tribunal accepted incorporation of the policy and dismissed the claim. The Employment Appeal Tribunal reversed, holding the handbook obligation to be free-standing and construing "unable to work" as inability to do the job held when injured. The Court of Appeal analysed (i) whether the clause incorporated the insurer's policy and (ii) the proper construction of "unable to work".

• On incorporation: the court found clause 5.3 to be a plainly expressed contractual provision by the employer and not to incorporate the insurer's policy by reference; the employee knew nothing of the policy and the clause itself specified the entitlement sufficiently for enforcement.
• On the meaning of "unable to work": the court rejected the Employment Appeal Tribunal's narrower construction limited to the pre-accident job. It held that clause 5.3 applies only where an employee is medically certified, after 26 weeks, as still unable to work in the sense that there is no continuous remunerative full-time work which he can realistically be expected to do; it does not mean inability to do any and every activity, nor is it satisfied merely because the pre-accident job cannot be performed if other suitable employment exists.
• Remittal: because the factual question whether the respondent was unable to work within that meaning had not been determined, the court remitted that issue to an Employment Tribunal for decision.

The court therefore allowed the appeal to the extent of remitting the outstanding factual issue for determination, concluding that the contractual obligation stood independently of the insurer's position.

Appeal allowed to the extent that the Employment Tribunal should determine the outstanding factual question. The court held that clause 5.3 of the employer's handbook is a freestanding contractual obligation and does not incorporate the insurer's policy; "unable to work" means there is no continuous remunerative full-time work which the employee can realistically be expected to do. The question whether the respondent meets that test was remitted to an Employment Tribunal for determination.

The claim was first heard by an Employment Tribunal sitting at Leeds on 30 January 2001 which found that the insurer's policy had been incorporated and dismissed the claim. The Employment Appeal Tribunal (Judge D.M. Levy QC) reversed on 18 July 2002, holding the handbook obligation to be free-standing and construing "unable to work" as inability to do the pre-accident job; the EAT granted permission to appeal to the Court of Appeal, which delivered judgment on 18 March 2003 [2003] EWCA Civ 411 and remitted the outstanding factual issue to an Employment Tribunal.