PHI disputes - a new route for Claimants? McMahon v AXA ICAS Ltd

**A dismissed employee looking to recover damages for lost permanent health insurance benefits is faced with having to bring a High Court claim, or cap their claim at £25,000 in the Employment Tribunal. But does a claim for unlawful deductions from wages provide a potential route forward?**  In this episode of **The BDBF Podcast**, **Nick Wilcox** and **Theo Nicou** explore the Inner House of the Court of Session's decision in McMahon v AXA ICAS Ltd, an important case concerning permanent health insurance (PHI) benefits, unlawful deductions from wages and the effect of dismissal on contractual entitlements. They discuss why the claimant became entitled to PHI benefits after a period of ill health, and how an administrative error meant that the employer had failed to put the relevant insurance policy in place. Following the claimant's dismissal on grounds of ill health capability, the dispute centred on whether she could claim PHI benefits as “wages” beyond the date of termination. **Nick** and **Theo** unpack the Employment Tribunal and Employment Appeal Tribunal's decisions before examining why the Inner House took a different approach, finding that the employer could potentially be liable for PHI payments as “wages” after dismissal. They explore the Court's consideration of collateral contractual obligations, implied terms preventing dismissal for the purpose of avoiding benefit obligations, and the possibility that the employment contract continued following a wrongful dismissal. Listeners will gain practical guidance on: - When permanent health insurance benefits may continue after dismissal - How PHI provisions can operate as contractual obligations owed directly by an employer - The distinction between wages and damages for breach of contract - The circumstances in which an employer may be prevented from dismissing an employee to avoid contractual benefit obligations - The potential implications of the decision for employers and employment contracts For employment lawyers, HR professionals, in-house counsel and employers, this episode provides valuable insight into the interaction between dismissal, contractual benefits and unlawful deductions from wages, and highlights the importance of carefully drafted PHI provisions in employment contracts. **Disclaimer:** Views of external guest speakers do not represent those of BDBF. **Contact BDBF** Thank you for tuning in to*The BDBF Podcast:* *News and Insights for the Employment Law Community*, where we dive into practical guidance, expert analysis, and updates on employment law developments. For more behind-the-scenes content, exclusive events, and expert insights, please visit our website or follow us on your favourite social platform. We’d love to hear from you, particularly with feedback on the Podcast and requests for topics to cover in future episodes.  Drop us a line [podcast@bdbf.co.uk](mailto:podcast@bdbf.co.uk)  **Find out more:** Website: www.bdbf.co.uk/ Email: [info@bdbf.co.uk](mailto:info@bdbf.co.uk) Phone: +44(0)20 3828 0350 **Connect with us:** LinkedIn: www.linkedin.com/company/brahams-dutt-badrick-french-llp/ Facebook: www.facebook.com/BDBFLLP/ **Sign up to our newsletter:** www.bdbf.co.uk/newsletter-signup/ **Nick Wilcox** https://www.linkedin.com/in/nick-wilcox-48915526/ **Theo Nicou** https://www.linkedin.com/in/theonicou/