UK: Fixed-term employees - employer not liable for less favourable treatment under terms of PHI policy

An employer's policy with an insurer provided that employees received PHI cover after a 26 week qualifying period; however, fixed-term employees were not entitled to benefit where their fixed-term contracts expired before the end of the qualifying period (even if their contract was extended).

The EAT has upheld an ET ruling that the less favourable treatment suffered by the employee was the insurer's refusal to accept his claim, and the employer was not responsible for this because the insurer was not acting as the employer's agent.  The less favourable treatment was not the employer's earlier failure to negotiate an insurance policy extending cover to this type of situation. 

Even if the employer's negotiation of the policy had been less favourable treatment, the EAT upheld the ET's ruling that this would have been justified in pursuing the legitimate aim of providing employees with PHI at no greater expense than the costs of an annual premium, given that (on the limited evidence available) other insurers' policies also adopted the same, "apparently universal" approach. (Hall v Xerox UK Ltd)

Employers who provide benefits to employees will welcome the implication that they will not necessarily be responsible for discriminatory terms in the policies offered by their insurance provider.  However, it remains prudent to investigate whether more equal treatment might be available from other providers in the market.