The EAT held that it was not direct age discrimination for PHI payments to be stopped when an employee turned 65, despite the state pension age being 66.
This case was an appeal from the Employment Tribunal. Read our summary.
Facts
Mr Pelter was an employee and director at Buro Four Project Services Limited. On 7 March 2003, Mr Pelter entered into a new Director’s Service Agreement which stated that “[he] shall retire at the Company’s normal retirement age for Directors… whereupon the Agreement shall terminate with immediate effect”.
Buro Four Project Services Ltd agreed to provide Mr Pelter with access to permanent health insurance (PHI) rather than pay sick pay in the event that he became incapacitated from work. The insurance provided that payment of benefits would end at 65.
This was in accordance with paragraph 14 of schedule 9 of the Equality Act 2010. This paragraph states that it is not unlawful to remove insurance benefits when an employee reaches either age of 65 or the state pension age, whichever is later.
On 11 March 2011, Buro Four Project Services Ltd renewed its PHI policy with UNUM which provided that “Once a member is incapacitated the terms and conditions of the policy immediately prior to his incapacity will continue to determine his benefit…”
Mr Pelter became unable to work on 3 July 2011 and Buro Four Project Services Ltd began paying sick pay, pending payments being made by UNUM.
On 3 January 2012 the state pension age increased from 65 to 66.
Mr Pelter submitted a claim to UNUM for PHI benefits but this was not accepted by UNUM until 5 March 2013. The benefits were backdated so Buro Four Project Services Ltd recovered the sums they had paid to Mr Pelter.
When Mr Pelter turned 65 years of age, his PHI payments were stopped.
Mr Pelter claimed it was direct age discrimination for Buro Four Project Services Ltd to provide PHI where payments cease on his 65th birthday. Mr Palter argued that Buro Four Project Services Ltd’s failure to update the PHI policy applicable to Mr Pelter to comply with paragraph 14(1) of schedule 9 of the Equality Act 2010 (so that they could be extended to his 66th birthday) amounted to direct age discrimination. Mr Pelter also claimed it was direct age discrimination for Buro Four Project Services Ltd to not transfer him to a PHI policy which would pay beyond his 65th birthday as well as their decision to cease PHI payments to him on his 65th birthday.
An Employment Tribunal ruled against Mr Pelter, finding that Buro Four Project Services Ltd was entitled to cease PHI payments when Mr Pelter reached 65.
Mr Pelter appealed to the EAT.
Decision
The EAT dismissed Mr Pelter’s appeal.
The EAT held that once Mr Pelter was eligible to payment from UNUM under the PHI scheme there could be no ongoing requirement for the respondent to provide permanent health insurance to him. Mr Pelter’s claim that there was a continuing obligation to renew the terms of the benefits he received where the terms are those imposed by the insurance company providing the benefit was rejected.
It was also held that Mr Pelter was not eligible for the extension of the benefit until he was 66 because he was not actively at work when the amendment to state pension age was made.
It was decided that under the terms of the PHI scheme, benefits were to be paid in accordance with the terms in force at the date Mr Pelter became incapacitated. The insurer ceased payments when Mr Pelter reached 65 because the terms of the scheme had crystallised on the 3 July 2011 when Mr Pelter became incapacitated to work. Therefore, the EAT held that the ET was correct to conclude that Mr Pelter had not been subjected to direct age discrimination by Buro Four Project Services Ltd.
The judgement is available here.
Mr D Pelter v Buro Four Project Services Limited, Case Number: EA-2021-000501-AT, 14 July 2022