Permanent health insurance (PHI) for employment lawyers

by Practical Law Employment

A practice note examining the employment law issues surrounding employer-funded permanent health insurance (PHI) schemes, also known as long-term disability insurance. The note explores the contractual status of these schemes, focusing on the critical relationship between the terms of the employment contract and the underlying insurance policy. It analyses the risks for employers when contractual promises exceed policy coverage and discusses key express and implied terms, such as the duty to procure benefits and the implied restriction on dismissing an employee to remove their PHI entitlement. Guidance is provided on navigating unfair dismissal claims, particularly the fairness of capability dismissals, and potential liability for discrimination. The note considers challenges related to age and disability discrimination, including scheme cut-off ages and access for employees on long-term sick leave. It also reviews the impact of PHI on other statutory and contractual rights, such as holiday pay, notice periods, and TUPE transfers.