The Employment Appeal Tribunal (EAT) has ruled that an employer was not entitled to dismiss an employee who was on long-term sick leave and receiving benefits under a long-term disability scheme. It implied a term into the employee’s contract of employment that the employer would not dismiss for incapacity if that would thwart the individual’s entitlement to benefits under a long-term disability plan.


In Awan v ICTS, Mr Awan initially worked as a security agent for American Airlines(AA) at Heathrow airport. He had a contractual right to an insured long-term disability benefit plan, the terms of which stated benefits would cease if he was no longer employed.

Mr Awan went on sick leave with depression in October 2012. AA outsourced the security function to ICTS in December and Mr Awan’s employment transferred to them under TUPE. He remained off sick until his employment was terminated in November 2014 on capability grounds; his symptoms had not improved and no suitable adjustments to facilitate his return to work could be agreed.  By this time he had begun receiving payments under the long-term disability plan.

Employment tribunal claim

Mr Awan claimed the decision to dismiss him while he was still receiving benefits under the plan was unfair dismissal and also an act of unlawful discrimination arising from disability (section 15 claim). It was accepted that he was disabled for the purposes of the Equality Act 2010.

The tribunal held that ICTS had acted reasonably in dismissing Mr Awan on capability grounds and that his dismissal was justified for the purpose of the section 15 claim. He appealed to the EAT and argued that a term should be implied into his contract which restricted ICTS’s ability to dismiss him at a time he was entitled to long-term disability benefits.

EAT decision

The EAT overturned the tribunal’s decision and held that a term could be implied that the employer would not dismiss on the grounds of incapacity to work once he became entitled to payment of disability income. It referred the question of whether the dismissal was fair and justified back to the tribunal.


This case will provide comfort to those receiving permanent health insurance benefits that, once they start drawing these, an employer will not usually be able to dismiss on capability grounds. However, this case does not extend to dismissals for other reasons such as redundancy. The position is also likely to be different if the employment contract contains an express clause giving the employer the right to dismiss on capability grounds.

For advice on your entitlements in the event of long-term absence, talk to our employment law specialists today. We’ll help you figure out the best way forward for you.

Share this update on

Contact Us

  • Drop files here or