Fixed-term employee – less favourable treatment – not employer’s fault

The employer offered the benefit of income protection to fixed term and permanent employees where they had been off work for 26 consecutive weeks as a result of illness, subject to the terms of the insurance policy. However the policy prevented fixed term employees from benefiting if their fixed term contracts expired before the end of the 26 week qualifying period. Consequently the insurer refused the application from a fixed term employee whose contract expired before the qualifying period.

The EAT accepted that the fixed term employee was treated less favourably than a comparable permanent employee, whose claim would have been accepted. However it also held that the less favourable treatment was not caused by the employer but instead by the insurer whose policy the employer offered as a benefit. It was the insurer’s decision to word the policy in this way which caused the detriment, not any action or omission by the employer. It held that the insurer was not acting as agent for the employer.

This case will be of some comfort to employers who offer benefits to employees as they will not necessarily be responsible for any terms which are potentially discriminatory in the insurance policy in circumstances where it is the insurance company which sets the terms. The common law principles of agency will apply to determining whether an individual is acting as agent for the purposes of the Fixed Term Employees Regulations.

This legal update is provided for general information purposes only and should not be applied to specific circumstances without prior consultation with us.

For further details on any of the issues covered in this update please contact Gemma Ospedale, Partner in Employment on 020 7583 2222.