INSIGHT: Employer’s Refusal to Extend PHI Not Age Discrimination

In a case which emphasises the importance of clarity of language when providing information on employees' contractual entitlement to Permanent Health Insurance (PHI) benefits, the Employment Appeal Tribunal (EAT) has upheld the decision of an Employment Tribunal (ET) to strike out a woman's claims for direct age discrimination and unauthorised deduction from wages (Smith v Gartner UK Limited).

Ms Smith went off sick from her job at Gartner UK Limited in November 2002 and did not return to work. From May 2003, she started to receive payments under her employer's Permanent Health/Disability Insurance scheme. The company's retirement age at that time was 60; there was, as yet, no law against age discrimination. In 2007, following the introduction of the Employment Equality (Age) Regulations 2006, Gartner introduced a new PHI scheme under which the age limit for benefits was increased to 65.

When Ms Smith reached age 60 in September 2014, Gartner ceased making payments to her under the scheme. She brought claims of direct age discrimination and unlawful deduction from wages. A preliminary hearing overran and the parties involved were directed to send in further written submissions. Based on these, the ET struck out Ms Smith's claims as having no reasonable prospect of success. Her subsequent appeal against the ET's decision was dismissed by the EAT.

The EAT agreed with the ET that the terms of the package accepted by Ms Smith when she took the job clearly stated that the benefits were made available under an insurance scheme and that all benefits offered were 'subject to the rules in force at that time', when the company's retirement age was 60. A further document, a 'Guide to Company Benefits', relied on by Ms Smith at the ET, reiterated those terms and made it clear that Gartner's contractual obligation was to provide PHI subject to the rules of the insurance policy, not to make payments itself. As it was not contractually obliged to make those payments, the claim for unlawful deductions was bound to fail. Furthermore, the decision not to make payments to Ms Smith beyond age 60 was because that was the relevant retirement age under the terms of the insurance policy at the time she went into benefit, not direct age discrimination on the part of her employer.

As regards Ms Smith's claim of direct age discrimination, the EAT further concluded that Gartner did not directly discriminate against her on the ground of age in not extending to her the benefits available under the PHI scheme introduced in 2007. At that time, she was already receiving benefits under the old scheme and did not meet the conditions of the new scheme because she was not actively working in the period immediately before making a claim under it. The difference in treatment was simply a distinction between employees who were already receiving benefits and those who were not, which arose as a result of the insurance company having different policies with regard to the different positions.

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