Death in Service benefits - Fox v British Airways
The case of Fox v British Airways plc concerned entitlement to death in service benefits where the recipient had died shortly after being dismissed for medical incapacity. Death in service benefits amounting to some £85,000 would have been paid to the deceased’s estate if he had still been employed at the time of his death. A claim for unfair dismissal and disability discrimination was launched by the father of the deceased as an attempt to obtain compensation for the loss of the death in service benefits.
Mr Fox was employed by British Airways. He was dismissed in 2010 following a six-month absence from work due to an ongoing back condition, and as a result of having exhausted his sick pay entitlement. The reason for the dismissal was given as medical incapacity. Mr Fox’s condition was serious but not fatal. However, five days after he was dismissed he underwent an operation and three weeks later he died from complications.
The claim for compensation for the loss of death in service benefits was brought by Mr Fox’s father, on the basis that if he had not been unfairly dismissed and discriminated against he would still have been employed and so his estate would have been entitled to the death in service benefits.
The Employment Tribunal found that because the death in service benefits were not a benefit to Mr Fox but to his dependents, they would not form part of the calculation of his loss if the unfair dismissal and discrimination claims were successful. However, the Employment Appeals Tribunal found the opposite – that the benefits would form part of the calculation of loss.
The Court of Appeal decision agreed with the Employment Appeals Tribunal. It was found that although Mr Fox had no claim to the death in service benefits in his own right, it was part of the value of his employment contract and so should be treated as ‘pecuniary loss’ to Mr Fox himself.
On the matter of quantifying the loss of the benefit, the Court of Appeal stated that ‘other things being equal’ deciding the amount would depend on the cost of obtaining the equivalent death in service benefits in the market. However, because at this point Mr Fox was now deceased, this was not possible. As a result, if the claim for unfair dismissal and discrimination succeeded, the measure should be that Mr Fox’s dependents be put in the same position that they would have been in had he not been unfairly dismissed i.e. entitled to the £85,000 payout.
The issue to note here for employers is that if an employee dies shortly after being dismissed there is the possibility of his or her estate recovering death in service benefits compensation, depending on the circumstances. Liability would need to be established and this can be tricky, particularly as the employee is deceased. However, as Mr Fox’s case shows this is possible and so is something that employers should be aware of.