our series on the implications of recent significant cases, Anthony Korn, a
barrister at 199 Strand Chambers, looks at the issues surrounding some
Jowitt v Pioneer Technology (UK) Ltd  IRLR 356
Health Insurance (PHI) is a valuable benefit for sick staff, but the Court of
Appeal’s ruling in Jowitt v Pioneer Technology (UK) Ltd  IRLR 356
confirms that such schemes can cause headaches for employers.
was employed by Pioneer Technology as a senior technician. When his position
became permanent in 1995, he was advised that his terms and conditions of
employment were detailed in the company handbook.
stated that the company ran a scheme designed to provide an income during
lengthy periods of absence due to prolonged illness or injury, and that
‘members of staff are entitled to two-thirds of normal pay… after 26 weeks’
continuous absence through illness or disability for as long as they are unable
to work up to the date of retirement…’.
insurance cover which the company had taken out with Swiss Life defined
‘disablement’ as a ‘state of infirmity of mind or body as a result of which a
member shall be totally incapacitated from following the occupation in which he
was engaged by the employer… and is not following any other occupation’. Jowitt
was unaware of the existence of the insurance policy or its terms.
October 1996, he was involved in an accident at work in which he sustained
serious injury to his neck which left him permanently unable to work as a
technician. He initially received payments under the PHI scheme, but some two
years later, a consultant orthopaedic surgeon advised the insurers that Jowitt
was "not disabled from any kind of employment activity", and
accordingly the insurers refused to make any further payments to the employer’s
under the policy. Having unsuccessfully attempted to persuade the insurer to
change its mind, the company stopped paying Jowitt any long-term disability
complained under Section 13 of the Employment Rights Act that the non-payment
amounted to an unlawful deduction of wages. However, the employment tribunal
rejected his complaint, accepting the employer’s argument that Jowitt was only
entitled to long-term disability benefit if he satisfied the provisions of the
insurance policy. It also found the insurer was entitled to conclude on medical
evidence that Jowitt was not eligible for payment under the policy as he was
fit to work – albeit not in his previous role.
the appeal, the EAT ruled that Jowitt’s entitlement to payment rested not on
the terms of the insurance policy (as this had not been referred to in the
company handbook), but on the terms set out in the company handbook. In regard
to this case, the term meant ‘unable to work’ as a senior technician, rather
than being unable to work at all. The EAT found it was inconceivable that the
parties would not have understood that an employee with a long-term disability
resulting from an industrial injury would not have been covered by the scheme
as described in the company handbook.
the appeal in part, the Court of Appeal ruled the EAT was correct in concluding
that the terms stated in the company’s handbook formed part of Jowitt’s
contract. There was "no foundation for incorporating the [insurance]
policy terms either directly or by reference into this contract of
the Court of Appeal differed from the EAT on its interpretation of the term
‘unable to work’. It ruled that the phrase ‘unable to work’ means what it says
to the extent that a worker was only entitled to payment if unable to work. But
the court went on to rule that someone
is only able to work if the employer is
in a position to offer ‘continuous remunerative work’ which the employee ‘can
realistically be expected to do’.
complaint was therefore sent back to the tribunal to determine whether he was unable
to work in the sense described by the Court of Appeal.