EAT overturns strike-out order

In McMahon v AXA ICAS [2025] EAT 8, the EAT faced a number of issues on appeal around the payment due from a deduction of wages as well as a disability discrimination claim which was struck out by the employment tribunal. The respondent also cross-appealed a decision on deduction of wages, arguing that there was no contractual obligation to pay a Permanent Health Insurance (PHI) benefit, to which the claimant had been entitled during employment, and it was only required to maintain an insurance policy. The EAT dismissed the cross-appeal and the majority of the appeal in relation to the alleged deductions and the definition of earnings. The EAT found that:

• the tribunal had been correct in its determination of what counted as ‘normal earnings’ for the calculation of PHI, however it had erred in the application of the 5% annual increase to which the claimant was entitled. This would however be resolved at a remedy hearing

• the claimant had a contractual entitlement to the payments under the PHI scheme, which on proper construction of the contractual documents between the two parties, was owed by the respondent to the claimant rather than a simple obligation to maintain a policy of insurance

• the tribunal had erred by striking out the disability discrimination claim on the basis that the passage of time had meant that a fair trial on the issues was no longer possible without full consideration of the factors set out by Simler J in Daly v Northumberland and Tyne and Wear NHS Foundation Trust (2014) (2014) UKEAT/0306/14. The failure by the tribunal to properly evaluate the evidence or allow the claimant to expand on the specifics of the claim prior to the strike-out decision made it unfair.

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