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Employee dismissal while entitled to long-term disability benefits in breach of implied term

The Employment Appeal Tribunal (EAT)recently decided that an employment tribunal was wrong to find an employer was correct in dismissing an employee on the grounds of capability while he was contractually entitled to long-term disability benefits. The EAT stated there was a clear contradiction between the employer’s contractual right to terminate on notice and the employee’s contractual right to disability benefits. The employer could not terminate for incapacity reasons while the employee was entitled to disability benefits.


This case confirms the position in the previous authorities that an employer cannot terminate the employment of an employee for incapacity where they are contractually entitled to long term disability Permanent Health Insurance.