CR321 Exceptions and exclusions
Exceptions and exclusions
Retrenchment benefit – cover not applicable to independent or fixed term contractors – complainant employed on a temporary basis.
1. The complainant, who was employed on a temporary basis, was retrenched and lodged a claim for a retrenchment benefit with the insurer.
2. The clause applicable to the retrenchment benefit provided:
“Exclusions on Retrenchment Benefit
No benefits will be payable where:
(ii) the Life Insured is an independent or fixed term contractor …”
and because the complainant had been employed on a temporary basis only, the insurer repudiated the claim.
3. It was common cause that the complainant was not an independent contractor. The remaining question was therefore whether the complainant had been a ‘fixed term contractor’.
4. A fixed term contract is one which has a definite start and end date, or terminates automatically when a particular task is completed or after a specific event other than retirement or dismissal.
5. It was pointed out to the insurer that whilst the complainant’s contract of employment had a definite start date, it did not have a definite end date. It also did not terminate automatically when a particular task was completed or after a specific event other than retirement or dismissal. It therefore did not follow that, because the complainant was employed on a temporary basis, he was a fixed term contractor.
6. It would have been otherwise had the clause provided that no retrenchment benefit would be payable where the life insured had been employed on a temporary basis, or that a retrenchment benefit would only be payable if the life insured had been employed on a permanent basis.
7. The office was therefore of the view that the complainant’s claim was not excluded by the clause.
8. The insurer accepted this and paid the claim accordingly.