Employers could be on the hook for death-in-service claims if an employee has been unfairly dismissed and subsequently dies, a court has ruled.
The Court of Appeal dismissed the appeal lodged by British Airways in the case against the father of deceased former-employee Gary Fox.
Fox died less than a month after his employment with BA was terminated.
The court agreed with the Employment Appeal Tribunal (EAT) which found that if liability were established, Mr Fox's estate would be entitled to compensation equivalent to the full amount of the benefit that would have been payable if he had remained in employment at the date of his death.
In all it is estimated that this will prove to be around £85,000.
WSB reported that this ruling had "shaken" lawyers when it was delivered last year.
In delivering the verdict, Lord Justice Moore-Bick said: "If Mr. Fox can make good his claim that his son was unfairly dismissed or that his dismissal amounted to unlawful discrimination, Gary Fox had at the time of his death a right to recover from British Airways damages in respect of the loss of the contractual benefit represented by the death-in-service benefit provided by the company's pension scheme of which he would otherwise have remained an active member."
Fox had worked for the airline for over twenty years but had suffered from a serious back condition following an accident and had to be away from work for long periods.
In June 2010, when he had been off work for more than six months and had exhausted his sick pay entitlement, he was given notice of dismissal for medical incapacity with effect from 21 September 2010.
Five days after his employment was terminated he went into hospital for a major operation and was expected to make a recovery in due course; but he died on 16 October 2010.
Cloisters barrister Sian McKinley said: "Normally, where a benefit such as life assurance has been lost, the appropriate measure of damage would be the cost of securing the equivalent benefit in the market.
"However, in these unusual circumstances, that approach was not appropriate. In light of the known fact of Mr Fox's death so soon after dismissal, the value to him of the lost benefit was the full £85,000."