ICTS (UK) Ltd v Visram

Under section 98(4) of the Employment Rights Act 1996, an employee’s contractual entitlement to long-term disability benefits, and an implied term protecting that entitlement, form part of the circumstances relevant to fairness. They do not make dismissal automatically unfair. A dismissal may nevertheless be unfair where the employer has failed reasonably to investigate those contractual rights before dismissing for incapacity.

For section 15 of the Equality Act 2010, an employer relying on removal from the payroll as a legitimate aim must prove a real need. Justification requires an objective and proportionate balance of the employer’s demonstrated business needs against the substantial disadvantage caused by dismissal.

The Claimant, a long-serving security agent, transferred to the Respondent under Transfer of Undertakings (Protection of Employment) Regulations 2006 while absent through stress and depression. His contract provided for long-term disability benefits. The Employment Tribunal found that he had a contractual entitlement to those benefits and an implied term preventing dismissal for ill health where dismissal would remove that entitlement.

The Respondent dismissed him for medical incapacity. The Reading Employment Tribunal upheld claims for ordinary unfair dismissal and discrimination arising from disability under section 15 of the Equality Act 2010. It found that the Respondent had inadequately investigated the benefits entitlement and had not proved a real need to remove him from the payroll.

The Respondent appealed, contending that the Tribunal had wrongly allowed the contractual issue to determine both statutory claims.

1. Appeal dismissed. The Employment Tribunal did not conflate breach of contract with statutory unfair dismissal. Under section 98(4) of the Employment Rights Act 1996, the contractual entitlement to long-term disability benefits was part of the factual matrix which the Tribunal was entitled to consider.

2. A mistaken view of an employee’s contractual rights does not, without more, make a dismissal unfair. The Tribunal’s conclusion, however, rested on the Respondent’s insufficient investigation of a repeatedly asserted contractual entitlement. That finding was within the Tribunal’s assessment of the range of reasonable responses and was not challenged on appeal.

3. The express benefits entitlement and the implied term consistent with Aspden were relevant considerations. They did not dictate the statutory result, but could properly be weighed with the inadequate investigation. The Tribunal permissibly concluded that dismissal for incapacity was unfair in those circumstances.

4. On section 15 of the Equality Act 2010, the Respondent bore the burden of proving that its stated aim met a real need. Although removal from a payroll could in an appropriate case be a legitimate aim, the Tribunal found that the proposed removal here was merely a tidying-up exercise. The Respondent had produced no evidence of a real operational need.

5. The Tribunal also conducted the required objective proportionality assessment. It could weigh the substantial loss of long-term disability benefits against the minimal demonstrated administrative burden of retaining the Claimant’s name on the payroll. Its conclusion that dismissal was not proportionate disclosed no error of law.

• Employment Appeal Tribunal: Appeal dismissed on 26 July 2016.
• Reading Employment Tribunal: Judgment sent to the parties on 24 August 2015 upheld the claims for ordinary unfair dismissal and discrimination arising from disability. It rejected the automatic unfair dismissal claim connected with the transfer.