PHI And Obligation To Cover Payments Under TUPE

• Published date: 13 September 2021
• Subject Matter: Employment and HR, Insurance, Employee Benefits & Compensation, Employment Litigation/ Tribunals, Insurance Laws and Products
• Law Firm: Trowers & Hamlins
• Author: Ms Emma Burrows and Nicola Ihnatowicz

The Employment Appeal Tribunal (EAT) has held in Amdocs Systems Group Ltd v Langton that an employer was liable to pay the level of income protection payments set out in an offer letter and summary of benefits provided by the employee's original employer prior to a TUPE transfer.

The "escalator" part of the payments was not covered by the employer's insurance, but the employer was still obliged to pay them.

The claimant was employed by Cramer Systems Ltd from 2003. He received an offer letter, a summary of benefits and a contract of service. Both the letter and the summary set out the terms of a long-term sickness absence scheme and the level of income protection payments (IPP) under it. These included reference to an "escalator" of 5% per annum which would apply after the first 52 weeks. Cramer had insurance cover in relation to its obligation to pay IPP, which included the escalator.

In 2006 ASG acquired Cramer and in 2007 an ASG HR representative gave a presentation in which they stated that the IPP provision would not be affected following the TUPE transfer. This was confirmed in a subsequent letter and the claimant also signed a form confirming that he wished to participate in ASG's income protection scheme. In June 2009 he began a period of long-term sickness absence and, from November 2009, began to receive IPP, paid through PAYE. In November 2016 the claimant was informed by ASG that the escalator had not been, and would not be, applied.

He was told that he was not entitled to it as it had ceased to be part of the IPP scheme in 2008 and he had not begun to claim under the scheme until November 2009. In 2018 the claimant brought a claim for unlawful deduction from wages relating to the failure to pay the escalator. The tribunal held that he was contractually entitled to have the escalator applied in the calculation of the IPP.

The EAT dismissed ASG's appeal. It held that the contents of the claimant's contract of service were contractually binding...