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The recent Employment Appeal Tribunal case of AMDOCS Systems Group v Langton is a reminder to employers of the need to be careful when drafting offer letters and contracts of employment for new starters. The case involved the offer of PHI, a commonly offered employment benefit, which usually pays out a percentage of the employee’s salary whilst that employee remains on long-term sick after a waiting time, often around 6 months. 

The level of benefit under different policies may of course vary and the choice of policy taken by an employer may not always remain the same over time.  The case highlights the importance of ensuring that any communication to employees does not contractually commit the employer to provide a level of benefit which may go beyond that which it chooses to purchase in the future.

So how is this best overcome?  Firstly, consider what documentation will form part of the employee’s contract of employment and so have contractual status which may require the employee’s consent to any change.  Often there will be an offer letter, a contract of employment and a separate document or set of documents which set out further details of the employee benefits on offer.

Usually, benefits such as PHI are referred to in the contract of employment even if there also contains a statement that further details are available from HR.  However, it is also advisable to ensure that this reference is sufficiently clear but perhaps not too detailed as to the level of the benefit in case this changes over time.  Statements such as: “The Company shall only be obliged to make payments to you under the Scheme if it has received payment from the Scheme provider for that purpose or if you are not receiving benefits from the Scheme provider directly…” can ensure that the employer is not contractually committing to pay more than it may recover from any policy it has in place.  However, consideration also needs to be given to what is then also said in any additional documents provided by HR about the particular policy.

PHI policies can also raise other HR and employment issues for employers which they should remain aware of.  For example, an employee who has a contractual entitlement to a PHI benefit and meets the criteria under the relevant policy but does not receive the PHI payments may bring a claim of breach of contract against the employer. Even if the PHI scheme is not contractual, an employee may argue that there is an implied term that the employer will make the PHI payments available to him/her if the eligibility criteria is met. An employer also needs to ensure that it notifies the policy provider in the event that an employee entitled to PHI becomes ill and potentially entitled to the benefit as a failure to do so may amount to a breach of the implied term of trust and confidence and result in an employment claim.

It is also always prudent to seek advice if you are considering dismissing an employee who may be eligible for PHI once on long-term sick leave. Claims for breach of contract in these circumstances can be very costly for the employer.

In conclusion, if you have PHI cover in place already or are planning to introduce it as an employee benefit, taking time to review your existing paperwork which refers to the benefit and/or taking time to carefully draft any new reference to it will be time well spent. We are also always happy to advise and assist with the preparation of the contract of employment, employment policies and any other HR documentation so as to minimise the risk of a potential claim.

Please get in touch if you would like to discuss any questions you may have about right to work checks: 

E: / T: +44 (0)1252 821792

HR, Employment Law and Immigration Solicitors

+44 (0)1252 821792