Since the abolition of the default retirement age some time ago, questions have arisen regarding what happens to employee benefits should they decide to remain in employment over a certain age.
In the recent case of Smith v Gartner UK Ltd, Ms Smith (the Claimant) was absent from work on the grounds of sickness and had been receiving payments under Gartner UK Ltd’s (the Respondent) Permanent Health Insurance (PHI) scheme during this time. In line with the terms of the PHI policy that the Claimant had originally signed up to in 2003, these payments were stopped when the Claimant reached the age of 60.
Of further note is the fact that the Respondents had in fact introduced a new PHI scheme in 2007 which provided employees with cover until the age of 65.
In response to the cessation of her benefits, the Claimant brought a claim for direct age discrimination against the Respondents, arguing that by not continuing the payments beyond the age of 60 they had treated her less favourably as a result of her age and could not justify this decision.
Ms Smith’s claim was rejected by the Employment Tribunal and she subsequently appealed to the Employment Appeal Tribunal (EAT) who rejected her appeal on the basis that the reason her payments ceased at the age of 60 was purely because the terms of the policy she had signed up to dictated that this be the case. This was therefore not a decision made by the Respondent and as such could not be deemed an act of discrimination.
The EAT further decided that the Respondent’s decision not to extend the benefits of the PHI policy introduced in 2007, could similarly not be deemed discriminatory. As the Claimant was already receiving benefits under the old PHI policy and was not actively working, she did not satisfy the conditions of the new scheme.
In light of the above, Employers could be advised that they are not under an obligation to offer additional benefits in excess of PHI schemes simply to avoid discrimination claims and that cases such as these may very much depend upon the terms of the PHI policy in question. It should also be noted that the Equality Act 2010 does allow Employers to cease offering PHI in addition to other insured benefits, at the age of 65 or the employee’s state pension age (whichever is the higher).
Beware however that this area of the law may well be subject to change in the future given the very different decision reached by the Employment Tribunal in 2013 in the case of Witham v Capita Insurance Services Ltd.
Mr Witham (the Claimant) had been receiving benefits from Capita under a PHI scheme, however these payments stopped when he turned 55.
He had previously been denied the opportunity to join a more favourable PHI scheme (introduced in 2002) which would have entitled him to receive PHI payments until the age of 65. The insurance company responsible for the PHI refused to indemnify Capita for PHI payments if the employee was not “actively at work” when applying to join the scheme.
As with Ms Smith, above, Mr Witham was at this time absent on the grounds of sickness and in receipt of benefits under the original PHI scheme – he was therefore not eligible to join the new scheme.
The Employment Tribunal held however that the Respondent had directly discriminated against Mr Witham on the grounds of age. The Respondent did claim that it was using proportionate means to achieve a legitimate aim of the business (i.e. to admit as many employees into its pension and PHI schemes as possible within the constraints of the insurance company’s conditions), however the Tribunal did not accept that the employer genuinely had this aim as they found the offer of PHI membership to be selective and not made to each and every employee.
The Tribunal further rejected the Respondent’s argument that stopping the PHI payment was an appropriate and necessary means of achieving that purported aim. The reason for this was that in ceasing to provide cover for the Claimant the Respondent had reduced the number of employees within the PHI scheme – this was not promoting its stated objective and the employer’s monetary considerations in funding the PHI scheme were not to be taken into account.
The Employment Tribunal also held that there had been indirect age discrimination as the employer had applied a provision criterion or practice (the “actively at work” criteria) which put employees over the age of 45 age at a particular disadvantage when compared to those younger than 45. As above, the Tribunal found that this could not be justified.
As a final point to note, the Employment Tribunal further decided that the Claimant had a contractual right to receive his PHI payments until the age of 65 because an earlier attempt to vary his employment terms and his entitlement under the policy was deemed to be invalid.
If you require further information/advice regarding any age discrimination or employee benefits issues then please contact Katharine Kelly on 0151 239 1079 or katharinekelly@canter-law.co.uk.
