UK: Compensation – impact of flexible PHI options on loss of earnings claim

Employers should be aware that, where they provide different levels of PHI benefit through a flexible benefits scheme, this may mean that only part of the PHI benefits being paid to an employee can be offset against a loss of earnings claim against the employer.

In Colt Technology Services Ltd v Brown, the employee had opted for 75% salary PHI when he could have chosen to reduce this to 50% and take a higher salary. As a result of workplace discrimination, he went on long-term sick leave receiving 75% salary. When calculating the loss of earnings arising from his successful discrimination claim, the EAT ruled that the employee had indirectly contributed to the PHI premiums for the top up from 50% to 75% cover, and therefore only PHI based on 50% salary should be deducted.

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Filed under Jurisdiction: UK, Remuneration (including bonus and incentive plans), Workplace culture, diversity and discrimination (including bullying and harassment)

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