Employment law

Permanent health insurance

Walton v Airtours Plc and Sun Life Assurance Company of Canada [2003] IRLR 161

A pilot who became ill with chronic fatigue syndrome was absent from work and in receipt of benefits under a permanent health insurance scheme effected by his employers Sun Life as insurers.

The scheme provided that after two years, benefits would only continue to be paid 'if the employee is unable to follow any occupation'.

Two years later, at the request of Sun Life, he was examined by a consultant neurologist who concluded that he was 'certainly not unfit for any type of work' and 'would cope easily both physically and mentally with less demanding jobs'.

Sun Life gave notice that payment of benefits in respect of him would cease and his employers informed him that his employment would be terminated.

He claimed that his contract of employment had been wrongly terminated, causing the cessation of benefits under the policy, or alternatively that his employers had wrongly ceased to make payments equivalent to benefits payable under the policy.

He sought a declaration that he was entitled to benefits under the policy by reason that he was unable to follow any occupation, and damages equivalent to the benefits payable until such time as he was able to pursue an occupation.

The High Court found in favour of the employee and the Court of Appeal upheld that decision.

Although the claimant was fit to undertake light sedentary work on a part-time basis, the introduction of such work would need to be accompanied by a programme of rehabilitation involving psychiatric support and the help of his employers and that without such structured support, he was 'unable to follow any occupation' for which he would otherwise be fit and must remain incapacitated in accordance with the terms of the PHI policy.

The words 'unable to follow any occupation' must be read in a common-sense, practical way, and any ability must be assessed realistically.

The phrase 'to follow any occupation' naturally connotes being engaged in regular work for a substantial or indefinite period.

It implies an element of continuity.

By Martin Edwards, Mace & Jones, Liverpool