3 August 2012

Murphy's Law in Action

"Anything that can go wrong will go wrong". A well known engineering adage which is used to illustrate the need for any process to be built in a way that ensures the processor is fully engaged.

What's true in engineering is also true in other fields, as illustrated by the recent case of Fox v British Airways. Although this case really turns on its own facts and doesn't clarify or amplify the law, it is an interesting example of the importance of considering all the surrounding circumstances before deciding to dismiss, and the pitfalls of not doing so.

Although only 43, Mr Fox was not a well man. He was off work for a time but about to undergo surgery that should mean he could return to work. However his employer did not take into account his likely return, and dismissed him for capability. A claim was brought for Unfair Dismissal and Disability Discrimination.

So far, so ordinary. However Mr Fox had unfortunately died a few days after being dismissed. It was his estate which brought the claims, and an initial issue centred on likely levels of compensation. Normally this will take into account all the losses arising out of the dismissal. Since his death prevented him from returning to work, Mr Fox was unlikely to be able to claim loss of earnings. However, he did have one other valuable benefit, namely a death in service benefit. If he had still been employed at the time of his death, the insurers would have paid out a tidy sum.

The legal arguments centred around whether his estate was entitled to that money. The courts decided that they were, since the benefit amounted to giving Mr Fox ease of mind about his dependants. In a normal case, the compensation would only amount to the cost of Mr Fox finding an equivalent benefit on the open market. However the courts took the view that was not adequate in this case. The contractual arrangement with Mr Fox was that his dependants should receive a certain sum if he died in service. That certain sum was £85,000. If he hadn't been dismissed he would have died in service and the insurer would have paid up. However, since Mr Fox did not meet the policy terms, the compensation burden will fall directly on the employer.

A very unusual set of circumstances, but a useful illustration of why it is important to avoid a mere box-ticking exercise, and fully engage brain before taking action against an employee.