If you are on income protection or permanent health insurance, which your employer has provided as a contractual benefit, you need to be really careful with any steps you take to terminate your employment. This is because your employer is only obliged to provide the benefit if you remain under contract with them, subject to some exceptions which need to be agreed if they are to kick in.
We have increasingly seen enquiries from clients who want to know what they should do because they have signed a settlement agreement to terminate their employment – mostly due to redundancy and so they can obtain an enhanced settlement package – and they now realise that they have signed away their right to ongoing income protection. The main message here is that you must not sign a settlement agreement unless you have taken advice about the income protection. Trying to remedy the situation once you have willingly signed away your rights could prove difficult, if not impossible.
Some insurers will permit you to move onto what is called a direct payment arrangement with them meaning that the contract between them and the employer falls away and is substituted with a new contract between you and the insurer. This has to be agreed and is by consent only. You should not assume it will happen. It may be possible but there is no guarantee. It is however, sometimes an option, but definitely one to explore before you sign a settlement agreement.
We come across employment lawyers who do not understand how the mechanism of income protection overlays the employment relationship and who have given negligent advice. If you have income protection as an employment benefit and are thinking of ending the employment relationship, take advice from a specialist employment lawyer. We routinely deal with these matters and can help.
