Limiting ‘lifelong’ benefits

As an employer, can you withdraw a lifelong employee benefit on dismissal?

This was a question that the Employment Appeal Tribunal in London recently considered.


The Claimants worked for the Respondent, Heathrow Express Operating Company. As employees, they were entitled to a 75% discount on all leisure travel. A third party provided this benefit under an agreement with the Respondent. Under that agreement, additional lifelong travel benefits would be granted in cases of redundancy, provided the employee had at least five of continuous service. This was not, however, expressly referenced in the Claimants’ contracts. Instead, the Respondent would provide documentation outlining the scheme at induction. There was no reference to limitations, nor that it could be withdrawn.

The Respondent later agreed with the third party that it could withdraw the benefit anytime. This further agreement also provided that non-safeguarded employees would not retain the benefit following redundancy or retirement, but it was not communicated to the Claimants.

The Claimants were made redundant. Each had at least five years of continuous service and, therefore, an expectation of lifelong discounted travel. The Respondent asserted that they were not contractually entitled to the benefit post-termination.

The Claimants claimed for breach of contract.

Employment Tribunal

The Employment Tribunal (ET) considered whether the Claimants had a contractual right to the benefits and whether the Respondent had the contractual right to withdraw that scheme.

The ET found that the benefits did form part of the Claimants’ contracts, but so did the further agreement with the third party.

The Claimants appealed.

Employment Appeal Tribunal

The Claimants’ appeal focused on the finding that the terms of the further agreement were incorporated into their employment contracts despite their not being told about them.

The Employment Appeal Tribunal (EAT) found that while an employment contract can, in principle, provide that a benefit is contingent on its terms continuing to be provided by the supplier to be enforceable, the employment contract should explicitly state this.

The Claimants were only aware of the further agreement once it was disclosed during the litigation. They had never been given a copy, and there was no reference to it in the original agreement or employment contracts. Accordingly, a right of withdrawal could not have been incorporated.

The EAT held that the terms of the additional agreement could not be considered part of the Claimants’ contracts and could not be used to justify removing the benefit.

The appeal was allowed, and the matter was sent back to IT for reconsideration.


As an employer, if you provide a contractual benefit through a third party, you should ensure its commitment to delivering that benefit. Its operation, in practice, should be unambiguous. This would equally apply to company cars or private medical insurance.

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