PERMANENT HEALTH INSURANCE AND AGE DISCRIMINATION

In the case of Smith v Gartner UK Limited UKEAT/0279/15/LA the Claimant, Ms Smith, had been employed by her employers, Gartner UK Ltd, since 1989. In 1996 a benefits package, referred to as a “Disability Plan”, was introduced and accepted by the Claimant. The plan included:

• Life Assurance
• Private Health Insurance
• Company Sick Pay
• Permanent Health/Disability Insurance (income protection insurance) – “subject to your terms and conditions of employment” which provided 75% of salary “until either return to work, retirement in service, or death in service”. At that time, the Claimant’s retirement age was 60 (there was no other relevant legislation in place relating to retirement age).

The employers accompanying guide stated:

• “All benefits offered are subject to the rules in force at that time” and
• The employer “reserves the right to terminate or offer alternative benefits wherever appropriate.”

The Claimant went off sick in November 2002 and received Permanent Health/Disability Insurance payments from May 2003.

In August 2007 the employer emailed all their employers advising that the age limit for benefits under the income protection insurance would change to meet changes in legislation. Those changes meant that an employee joining the scheme after that time could potentially benefit until their retirement age of 65.

In March 2014 the Claimant was advised that her benefit package would cease in September 2014, when she reached 60, although she actually still remained an employee. She therefore made a claim to the Employment Tribunal (ET) for:

• Unlawful deductions for salary – her perceived contractual right to receive payments until she actually retired at 65 and
• Direct age discrimination – the employers had treated her less favourably than someone joining the benefits scheme later than her, by not paying her insurance benefits and this was “not a proportionate means of achieving a legitimate aim” (i.e. direct discrimination).

The ET struck out her claim saying it had no reasonable prospect of success because:

• The Claimant was bound by the terms of the insurance policy applicable at the time she made her claim under it in 2003 (therefore her entitlement to benefits was until she reached 60)
• Her employer’s contractual obligation was to actually take out the insurance cover (i.e. make it available to the Claimant) and not to provide any payment (presumably because the insurers had those decision making powers) and so had met their obligations

The Claimant appealed to the Employment Appeal Tribunal (EAT) because she felt the Tribunal decision was wrong:

• Particularly in determining that her retirement age was 60 but also
• She questioned whether the email in August 2007 increasing the date of the age limit for benefits under the income protection insurance (because of the legislation changes) was a variation of her contract (and so increased the age limit for her to 65).

Ultimately, the EAT agreed with the ET and dismissed the Claimant’s appeal stating that the employers had fulfilled all their obligations and to stop making the payments was not age discrimination.

As in this case it is vital for all employers to be clear about how and when any benefits will apply. Spending some time drafting and checking the “terms” of benefits or relating to employment generally can subsequently prove invaluable.

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