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Compensation for Death in Service Benefits

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 Thanks to Sian McKinley of Cloisters for preparing this case summary

Can the estate of an employee who was dismissed, and died shortly after, bring a claim for the loss of a death in service benefit which he had enjoyed whilst in employment?

Yes, says the Court of Appeal in British Airways plc v Fox.

Gary Fox died just days after he was dismissed by his employer, BA. It was said that his dismissal was unfair and/or discriminatory. While in employment he had been a member of BA’s death-in-service scheme under which, if he died while in employment, payment would be made to beneficiaries identified by the trustees of the scheme of a sum of about £85,000. Because he had been dismissed by the time he died, no such payment was made.

The question was whether, in these circumstances, a claim for the full £85,000 could be maintained by Mr Fox’s estate.

BA contended that Mr Fox could never have received the £85,000 had he lived, so he could never have been able to claim for its loss. The loss was suffered not by him but by the putative beneficiaries. Accordingly, the estate, standing in his shoes, had no claim to that sum either.

The Court of Appeal disagreed. Underhill LJ remarked that employment law would be seriously defective if an employee were unable to claim compensation merely because the subject matter of a benefit was payable to others. The benefits in question formed part of the employee’s remuneration and its loss was a real pecuniary loss suffered by him.

Normally, where a benefit such as life assurance has been lost, the appropriate measure of damage would be the cost of securing the equivalent benefit in the market. However, in these unusual circumstances, that approach was not appropriate. In light of the known fact of Mr Fox’s death so soon after dismissal, the value to him of the lost benefit was the full £85,000.