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Death in Service Benefit

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[Thanks to Sian McKinley, Pupil Barrister at Cloisters, for preparing this case summary]

Can the estate of an employee who was unlawfully dismissed, and died shortly after, bring a claim for loss of a death in service benefit?

Yes, said the EAT in Fox v British Airways UKEAT/0033/12. Loss of a death in service benefit is a real loss to the employee and is recoverable by his estate.

Mr Fox died within days of being dismissed. His estate argued that his dismissal was unfair and discriminatory and brought a claim for both. The compensation in question was the value of the death in service benefit enjoyed by Mr Fox whilst in employment.

The Respondent argued, and the ET agreed, that the loss of the death in service benefit was not a loss to Mr Fox but to Mr Fox's beneficiaries. Accordingly it was not recoverable by Mr Fox's estate which could only claim in respect of losses suffered by him. The only loss suffered by Mr Fox was the loss of comfort of knowing his relatives would receive a payout in the event of his death. The ET valued this loss at £350, comparable to the loss of statutory rights.

The EAT (Langstaff P sitting alone) held that the death in service benefit was a contractual right which Mr Fox lost at the point he was dismissed. It did not matter that an employee would never be able to enjoy the proceeds of the benefit; the opportunity to use such a benefit for his dependents or causes he wished to support is also of value to the employee.

This loss would normally be valued as the cost of the insurance premium for a policy which will as nearly as possible provide the payment which the employee should have received under the death in service benefit. This premium will vary with the circumstances.

In this case, where the court knows that the employee died shortly after dismissal and no mitigation argument was raised, the cost of providing for payment of a lump sum known to be due within a short period of time is no less than that sum itself (the full value of the death in service payout). Langstaff P emphasised that this was because of the particular and unusual facts of this case.

The EAT also considered section 206(4) of the Employment Rights Act 1996 which provides for the appointment of appropriate representatives to instigate or continue litigation after the death of an employee. Langstaff P held that the correct procedure for instigating a claim is to make an application to the employment tribunal to be appointed as an appropriate representative and to wait for the application to be granted. Once it is granted, and only then, can a claim be validly submitted. If this means, through factors outside the representative's control, that a relevant time limit expires, then the employment tribunal will recognise that fact when applying the 'reasonably practicable' test in relation to time limits.