An employee who is long-term sick is not "assigned" for the purposes of TUPE
Permanent Health Insurance ("PHI") is a contractual benefit offered to employees that provides them with income if they become permanently disabled and unable to work in the capacity in which they were previously employed.
Dismissing an employee while they are in receipt of PHI benefits could, depending on the circumstances, entitle the employee to claim damages for breach of contract for being wrongfully deprived of benefits under the policy.
In the recent case of BT Managed Services Ltd v Edwards and another, the Employment Appeal Tribunal ("EAT") was asked to consider a set of circumstances whereby an employee was in receipt of PHI and unlikely to come back to work yet remained part of a team dedicated to a domestic network outsource contract. His employer transferred the contract to E Ltd and the EAT had to determine whether this employee who was not expected to return to work nonetheless was "assigned" to an organised grouping of employees that transferred under the Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE").
Ultimately, the EAT upheld the original Employment Tribunal Judge's decision that the employee was not assigned to the contract and ceased to be so when the decision was made that he would remain permanently absent from work so that he may continue to benefit from his PHI payments. The only link which remained thereafter between the contract and the employee was an administerial one and whilst there was certainly an organised grouping of employees (which for the purposes of TUPE is defined by reference to a performance of a particular economic activity) the employee was excluded from this as he was unable to contribute to that activity.
As an aside, this case does also act as a helpful reminder that, when considering dismissing an employee in receipt of PHI benefits, employers should consider the wording of that employee's contract, the rules of the policy and whether their actions could be construed as wrongfully depriving the individual of the possibility of cover under the scheme.
EMW of course can assist in both drafting and reviewing such wording to ensure that your business is properly protected.
For more information, speak to our employment team.