Fox v British Airways plc

Loss of a contractual death-in-service benefit is a real and substantial loss to the employee, even though payment would be made to beneficiaries only after death. Compensation is ordinarily assessed by reference to the premium required to secure equivalent cover, subject to mitigation. Where death is imminent and no mitigation is argued, the loss may prima facie equal the benefit payable.

Under section 206 of the Employment Rights Act 1996, appointment of a representative must precede institution of proceedings. Proceedings issued before appointment are a nullity and cannot be retrospectively validated. Nevertheless, the limitation provisions may permit a later claim where it was not reasonably practicable to present a valid complaint within three months and it was then presented within a reasonable period.

Gary Fox was dismissed shortly before undergoing surgery and died soon afterwards. His employment contract provided death-in-service cover of three times his annual salary. His father pursued claims for unfair dismissal and disability discrimination, asserting that the dismissal caused loss of the benefit.

The Employment Tribunal treated the loss as principally affecting beneficiaries and awarded only a modest sum comparable to compensation for loss of statutory rights. It also held, alternatively, that duplicate unfair-dismissal proceedings were in time. The Employment Appeal Tribunal considered the proper valuation of the benefit and whether the original proceedings were validly instituted.

1. Appeal allowed. The Employment Tribunal had erred by treating the loss as one suffered by beneficiaries, or merely as loss of comfort. The employee had lost a contractual entitlement of value to him. The principles in Pickett v British Rail Engineering supported treating that deprivation as a real pecuniary loss.
2. The restriction in section 1(2)(a)(ii) of the Law Reform (Miscellaneous Provisions) Act 1934 did not exclude recovery. A death-in-service benefit is capital in nature and is payable on an event, namely death, rather than in respect of a period after death. The provision was directed to lost earnings and sums in the nature of earnings.
3. Proper compensation was the sum needed to secure equivalent cover. Normally this would be the cost of an appropriate insurance premium, varying with the claimant’s circumstances and subject to mitigation. On these facts, where death followed dismissal within weeks and mitigation was not argued, the prima facie loss was the full benefit of just over £85,000.
4. Cross-appeal dismissed. Section 206(4) of the Employment Rights Act 1996 required appointment before proceedings could be instituted. The initial ET1, filed before appointment, was a nullity and section 206 provided no retrospective validation. The Employment Judge’s contrary construction was wrong.
5. However, under section 111(2) of the Employment Rights Act 1996, the Tribunal was entitled to find that it was not reasonably practicable to present a valid complaint within three months, because the Tribunal had failed to determine the appointment application. The duplicate claim was presented within a reasonable period thereafter. The matter therefore remained properly before the Tribunal.
6. A substituted decision was directed, assessing the loss in the unfair-dismissal claim, subject to the statutory cap, and in the discrimination claim if liability were established, at the equivalent of three years’ pay.

• Employment Tribunal: assessed the death-in-service loss at approximately £350 and held, alternatively, that later proceedings were presented in time.
• Employment Appeal Tribunal: allowed the appeal, dismissed the cross-appeal, and substituted an assessment of just over £85,000, subject to the statutory cap where applicable.