Amdocs Systems Group Ltd v Langton [2021]
Mr Langton commenced employment with Cramer Systems Limited in 2003. He was given an offer letter, an employment contract and a summary of benefits. The offer letter and summary of benefits set out details of the income protection he was entitled to under the Company’s long-term sickness scheme; 75% of his annual salary after 13 weeks of sickness, and an ‘escalator’ payment of 5% per annum after the first 52 weeks.
In 2006 CMS was acquired by ASG Limited. Mr Langton was advised that his income protection benefit would not be affected and this was confirmed in writing.
In 2009 Mr Langton was diagnosed with a long-term illness and began receiving his income protection payments. In 2016 he was informed by ASG that he had not been receiving, and was not entitled to, his escalator payments. This was because it had ceased to be part of the income protection scheme in 2008. Mr Langton brought a claim for unlawful deductions from wages.
The tribunal held that the escalator payment was a contractual entitlement. Although the employment contract stated that the provisions relating to sickness absence could be varied, the tribunal found that this did not make the insurance arrangements clear enough (i.e. that the employer would obtain cover under the insurance policy and would pass the benefits to Mr Langton). The documentation provided to Mr Langton also stated that “the operation of [the income protection scheme] is governed by the terms of the group policies and nothing in this summary will override the terms of that document”. However, no policy was ever provided to Mr Langton.
ASG appealed but it was dismissed. The EAT stated that where there is any ambiguity or uncertainty as to whether the employer’s obligation to provide benefits is to be limited by reference to the specific terms of the employer’s insurance cover, that ambiguity will be resolved in favour of the employee. An employer needs to be clear about the terms of the insurance benefit, so that there can be no doubt that the employer’s commitment is limited by reference to the terms of the policy.
This case is a good reminder to employers to ensure that they clearly set out in contractual documentation that any liability to make income protection payments will be limited to the amounts received from the scheme insurer. It also serves as a reminder to any transferee employers on a TUPE transfer to check the level of any benefits and whether they will be fully covered by their existing insurance policies.
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