Other benefits in kind clause

Our benefits in kind clause specifically covers private medical and permanent health insurance, pension schemes and life assurance, as these are the most common benefits after company cars. However, you can also include any other benefits that you provide for your employees.

Insurance terms

With private medical and permanent health insurance and life assurance, as they are all insured benefits it’s the insurance company that will take the decision on whether the employee (or any beneficiaries) is entitled to benefits and on what terms, not you. You simply pay the insurance premiums and decide at the outset on the appropriate level of cover. That’s why it’s important to ensure the employee receives a copy of their insurance policy schedule and documents every year (or whenever they’re updated), so that they can see for themselves what it covers and what it doesn’t. In addition, because the ultimate decision on the payment of benefits is the insurance company’s and not yours, you don’t want to find that you have inadvertently contractually committed to providing the benefit yourself if the insurance company fails to do so. That could prove very expensive! Therefore, ensure you make it clear that you will not be liable to pay anything should the insurance provider refuse payment and that eligibility for payment is strictly governed by the terms of the insurer’s insurance policy. Our clause also provides that neither will you be liable in the event of any failure by or refusal from the provider to provide cover in the first place, or the application of any conditions or limitations placed on future benefits by the provider.

For a change

Also, from time to time, you might decide that you need to change insurance provider, usually because the premium is no longer competitive. Alternatively, you may need to amend the level of cover or terminate it altogether because it becomes prohibitively expensive. In these circumstances, ensure you reserve the right in the clause to change provider or to amend or terminate the cover or otherwise amend the terms and conditions of the scheme. Our clause includes all of these options. We’ve also provided for cover to cease when the employee reaches the age of 65, or the state pension if higher. This doesn’t constitute age discrimination as it’s permitted by the relevant legislation.

Ex-terminate

Where you do provide permanent health insurance cover and the employee’s entitlement to benefit under the scheme depends on their continuing in your employment, in the absence of an express term to the contrary, there is generally an implied term precluding you from dismissing them on account of their incapacity. This is because the dismissal would deprive the employee of the valuable benefits payable under the scheme. We have therefore overridden this implied clause and reserved the express contractual right to terminate the employee’s employment due to incapacity or for any other potentially fair reason, even if this means they are deprived of PHI benefits as a result. This may not be enforceable according to case law but it’s still worth including it. In any event, it might still be possible to dismiss the employee for another reason such as gross misconduct or redundancy, provided always that the redundancy is genuine and not an excuse to get rid of a sick employee!

Pension provision

We’ve given you three options for pension schemes, depending on whether you provide an occupational pension scheme (which could be either final salary or money purchase) or a group personal pension plan or you use the National Employment Savings Trust (NEST) as your pension scheme. In each case, you will need to ensure your scheme is a qualifying workplace pension scheme in compliance with your automatic enrolment duties under the Pensions Act 2008 in relation to your eligible workers (known as eligible jobholders). Eligible jobholders can still opt out of your pension scheme if they want to (and re-join at a later date).