Thread by @JasonBraier

1/ Amdocs Systems v Langton: an important warning to employers to pay close attention to the insured benefits they offer employees & a need to very carefully word entitlements intended to be limited to what the insurer from time to time covers.
assets.publishing.service.gov.uk/media/6124becb…

#ukemplaw

2/ L joined AS's predecessor, which AS acquired. His job offer & contract included income payment protection in the following terms:

3/ On transfer, AS presented that the IPP scheme wouldn't be affected, & L signed a form confirming he wished to continue to participate in the scheme.

4/ A couple of years later, in 2009, L was diagnosed with long-term illness & claimed PHI. His claim was approved & he began being paid IPP. However, whilst his terms of employment spoke of a 5% annual escalator, this was never applied.

5/ A number of years later, L's contract transferred to AS, which prompted him to investigate how much IPP he'd received & caused him to realise the escalator hadn't been applied. AS responded to queries by saying the escalator was removed a year before he went on sick leave.

6/ The ET found L originally had conferred on him entitlement to the escalator, that the summary of benefits here had contractual status & nothing in the contractual documents to indicate an intention that IPP entitlement may change from time to time.

7/ Unfortunately for AS, its history of manuals of benefits was incomplete. 1 had ceased having force in 2007 & there was then an evidential gap to 2012, thus nothing for when L commenced long-term leave. Thus there was no manual with a 'time to time' provision as at 2009.

8/ The ET also found AS didn't vary the entitlement to the escalator by an email in Nov 2016. That was particularly important here given that ERA s.23(4A) limited L's remedy to deductions within the 2 years prior to presenting the ET1 in March 2018.

9/ On appeal, AS set out a number of arguments re interpretation of the contractual entitlement, reliant on the contextual approach to construction set out by the Sup Ct in Wood v Capita. Of greatest general interest is the commercial logic submission.

10/ Under that, AS submitted that the ET's analysis was that AS intended to provide a fixed level of benefit irrespective of the level of insurance cover, which was a commercially improbably scenario.

11/ AS also argued the ET had erred in finding that whilst the summary had contractual force, a section in it saying it didn't override the terms of the written schemes had no contractual force as L wasn't provided with the scheme document.

12/ In respect of that point, AS argued it was a basic principle of contract law provisions of a document could be incorporated by reference without showing the document. Lord Denning's red hand in Thornton didn't apply where L had considered & signed a contract.

13/ L placed heavy reliance on the recent case of Awan v ICTS & the earlier case of Jowitt, in both of which the contractual commitment to PHI wasn't contingent on the underlying insurance being consistent with the contractual commitment.

14/ L noted that those cases & the present case shared as a feature the lack of any express provision limiting AS's commitment by reference to the terms of an insurance policy.

15/ L argued the ET was right to hold the summary had contractual force, applying the 'clear & certain statement' test of Keeley v Fosroc. L also relied on Sparks v DoT in asking whether the term would've been certain enough to bind if in a formal contractual document.

16/ On commercial logic, L argued that Arnold v Britton provided the court goes 1st to an objective construction of the words used in the contract, & that a party can't retroactively appeal to commercial common sense to rescue from a bad bargain.

17/ On the ET's point about non-incorporation of a term not shown to L, L argued that was consistent with a host of authorities (including Jowitt & Awan) that the significance of a term in an insurance policy has to be clearly drawn to the employee's attention to be incorporated.

18/ The EAT started by noting Wood provides both textualism & contextualism are available tools of construction, with their use dependent on the circumstances. The EAT agreed with L that commercial common sense couldn't be used to escape from the contract's natural meaning.

19/ On the Thornton point, HHJ Auerbach reviewed Villella, Jowitt, Briscoe & Awan, holding (i) the contra proferentem rule applies, & (ii) there needs to be unambiguous & express communication of any limitation of exposure, whether by providing the insurance document or otherwise

20/ Applying the legal principles, the EAT found the summary had contractual effect - it was clear & precise, consistent with the terms of the offer letter & cast in the language of entitlement.

21/ The EAT held, crucially, that reliance on an insurance policy term limiting/cutting back entitlements to which an employee is given express contractual benefit won't succeed without further steps to bring the particular term to the employee's attention.

22/ Simple reference in a summary to the fact that the entitlement is bound (generally) by the terms of the applicable insurance policy won't suffice. The Thornton approach applied & the fact L was sent, considered & signed the contract didn't take it away from that approach.

23/ Further, the escalator applied when the summary was given to L, & the summary didn't expressly say less favourable future insurance terms would apply. Contra proferentem worked against AS in that case. Also for the reasons in Arnold, commercial common sense couldn't save AS

24/ The EAT judgment ends in a costs appeal, which turned on the fact the ET hadn't been entitled to award L 100% of his costs in circumstances where it wasn't unreasonable for AS to put in the defence it did against C's reliance on the summary as entitling him to the escalator.