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Will stopping your employee’s permanent health insurance constitute age discrimination?

11th November, 2013

An employee whose payments of permanent health insurance (“PHI”) benefits stop at age 55 will have been discriminated against on the protected characteristic of age, according to the recent case of Whitham v Capita Insurance Services ET2505448/12.

In this case, Mr Whitham, who was employed by Capita, had been in receipt of PHI payments which stopped as he turned 55.

Some years previously, in 2002, Mr Whitham did have the opportunity to join a more favourable PHI scheme which would have continued payments until he reached age 65. However, his application to join this scheme was turned down as the insurance providers terms to indemnify Capita included and “actively at work” criterion. Mr Whitham was ill and in receipt of benefits under his current scheme at the time and therefore not “actively at work”.

The Employment Tribunal held that Capita had directly discriminated against Mr Whitham because of his age. Capita stated that the proportionate means of achieving a legitimate aim was to have as many employees on a PHI scheme as possible, subject to the insurer’s conditions. The Tribunal rejected this argument as the offer of PHI membership was selective. Stopping Mr Whitham’s PHI payment was not an appropriate and necessary means of achieving that purported aim. By ceasing to cover Mr Whitham the employer had reduced the number of employees within the PHI scheme. This was hardly promoting its stated objective. The employer’s budgetary considerations in funding the PHI scheme were not to be taken into account.

Furthermore, the Tribunal held that there had been indirect age discrimination as Capita had applied a provision, criterion or practice, namely the “actively at work” criterion, which put employees such as Mr Whitham who were over a certain age at a particular disadvantage by not receiving the benefits due to other employees.

Finally, the Employment Tribunal decided that an earlier purported variation of Mr Whitham’s employment terms and the policy entitlement was ineffective meaning that he had a contractual entitlement to receive PHI payments up to the age of 65.

This case highlights the importance of correctly implementing any benefits you offer to your employees and how poor implementation can result in an adverse effect.

For further information or advice on best practice for implementing benefits in your workplace and how to make these compliant with existing contracts of employment and policies, please contact Helen Watson on 01244 405565 or send an email to [email protected].

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