Refusal to Extend Permanent Health Insurance Beyond 60 Not Age Discrimination


3 mins

Posted on 31 Mar 2016

An employer did not discriminate on grounds of age when it ceased making permanent health insurance (PHI) payments to an employee who reached the age of 60. 

Speedread

An employer did not discriminate on grounds of age when it stopped making PHI payments to an employee at the age of 60 in accordance with terms of the PHI policy in force when she first claimed PHI benefits. The decision to stop benefits was the insurer’s, not the employer’s. There could therefore be no direct age discrimination by the employer. 

In addition, the employer’s decision not to extend a PHI policy it introduced in 2007 (which provided cover to age 65) was not direct age discrimination. The employee was already claiming under the previous policy and did not meet the conditions of the new scheme as she was not actively working immediately before beginning to claim. 

Facts

In Smith v Gartner UK Ltd, Ms Smith was on sick leave and receiving payments under Gartner’s permanent health insurance (PHI) scheme. Gartner ceased making payments when she reached the age of 60. This was in accordance with the terms of the scheme in force when she first claimed benefits in 2003. Gartner had introduced a new PHI scheme in 2007 which covered employees up to the age of 65. 

When her PHI payments ceased, Ms Smith claimed direct age discrimination. By not continuing her PHI payments beyond age 60, Gartner had treated her less favourably because of her age and its decision could not be justified. 

The employment tribunal stuck out her claim and Ms Smith appealed to the Employment Appeal Tribunal (EAT). 

Decision

The EAT rejected the appeal. The reason the payments ceased at 60 was because of the terms of the insurance policy in place when Ms Smith first began to claim PHI. Those terms were terms of the insurer, not Gartner. It therefore followed that the decision not to make payments beyond age 60 was not direct age discrimination by Gartner. 

In addition, Gartner’s decision not to extend the PHI policy introduced in 2007 (which provided cover to age 65) to Ms Smith was not direct age discrimination. She could not benefit from the new PHI policy because she was already claiming under the previous policy. She did not meet the conditions of the new scheme as she was not actively working immediately before beginning to claim. 

Implications

If an employer ceases to make PHI payments to an employee because the insurer’s terms provide for benefits to cease at that age, this will not amount to direct age discrimination by the employer. Likewise an employer is not obliged to transfer an employee already receiving PHI benefits to another PHI scheme which provides benefits to a later age. However, the decision in this case is in direct contrast to an employment tribunal’s decision (Whitham v Capita Insurance Services Ltd) and there may well be further developments in the law in this area. 

Note that under the Equality Act 2010, employers are in any event able to cease offering PHI and other insured benefits at the age of 65 or state pension age, whichever is higher.

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