In Fox v British Airways Plc the Court of Appeal has addressed two tricky questions arising from the death of an employee shortly after the termination of his employment. Can a tribunal award compensation for a benefit which was payable in the event of an employee’s death and can the claim be made on behalf of the deceased’s estate?
Gary Fox worked for BA for over twenty years. He developed a serious back condition and was off work for the first half of 2010. He was dismissed on the ground of medical incapacity on 21 September 2010. Five days later he had a major operation on his back from which, sadly, he did not recover and he died on 16 October 2010. He was 44, unmarried and childless.
If he had been employed at the time of his death the death in service payment due as a contractual entitlement would have been about £85,000. The scheme rules specify that eligibility for payment requires a member to be “currently in employment”.
Mr Fox’s father brought employment tribunal proceedings claiming that his son’s dismissal was unfair and that he was a victim of disability discrimination. The principal objective of the claim was to recover the death in service payment on the basis that, had he not been unfairly dismissed and/or discriminated against, he would still have been in employment less than a month later and the benefit would have been payable. Incidentally Mr Fox’s father was entitled to bring the claim on behalf of his deceased son in his capacity as personal representative (unfair dismissal claim permitted pursuant to sections 206(3) and (4) of the Employment Rights Act 1996 and the discrimination claim following the decision in Lewisham and Guys Mental Health NHS Trust v Andrews  ICR 707).
At a preliminary hearing held at the request of BA Employment Judge Hyams held that any award in respect of the death in service benefit should not reflect the loss to potential beneficiaries but should instead “the loss [to Mr Fox] of the comfort of knowing that his relatives would receive a lump sum insurance benefit on hs death”. He suggested that such an award should equate to an award for loss of statutory rights, typically £350.
Unsurprisingly Mr Fox senior appealed the decision and the President of the Employment Appeal Tribunal, Mr Justice Langstaff, agreed with him that the award, if liability was established, should be the full value of the death in service benefit. BA in turn appealed that decision, hence the referral to the Court of Appeal. Essentially BA’s argument was that the claim was bad in law because Mr Fox personally could never have enjoyed the death in service benefit. However the Court of Appeal noted that it has become accepted practice in personal injury claims to allow a claimant who has suffered a loss of earnings or of earning capacity to recover damages for the consequent diminution in value of pension or equivalent benefits earned by him but payable to his widow.
Lord Justice Underhill summarised his conclusion in this regard as follows:
…I consider that the loss of the chance of death-in-service benefit being paid under Rule 24 of the Scheme is to be regarded as a pecuniary loss suffered by Mr Fox for which he could have claimed in proceedings brought prior to his death.
Once that point is reached the objection that payment would be made only after Mr Fox’s death becomes irrelevant. What he is entitled to compensation for is, precisely, the fact that a benefit payable, to others, on his death has been lost.
As for the valuation of the claim he observed:
In these circumstances it is necessary to go back to first principles. Mr Fox’s estate is entitled to be put in the position that Mr Fox would have been in if he had not been dismissed (ex hypothesi unlawfully) when he was. In that case he would virtually certainly still have been in employment at the date of his death: the possibility that his employment might have terminated (lawfully) for some other reason in the interval between 21 September and 16 October 2010 is too small to require any discount. His beneficiaries would at that point have become entitled to the payment of £85,000. Since that entitlement is to be regarded as a benefit to him he – or his estate – can only be put in the position that he would have been in but for his dismissal if it is put in a position to enable an equivalent payment to be made; and that can only be done by the award of compensation in the full amount. The logic of that seems to me inexorable, and indeed in his oral submissions in reply Mr Nawbatt [for BA] was constrained to accept that in truth his case was “all or nothing” – that is, either the death-in-service benefit was wholly irrecoverable or the full amount lost had to be paid in compensation.
He left open the question of whether the award, subject to liability, should be subject to a deduction of £29,000 since the Trustees of the Scheme had already made a repayment of contributions and interest of that amount.