Not age discrimination for a health insurance benefit to cease at 65
In Pelter v Buro Four Project Services Ltd, the employment appeal tribunal upheld the decision of the employment tribunal and confirmed that it was not direct discrimination because of age where a personal health insurance scheme ceased when the employee reached 65.
Under the Equality Act 2010, direct age discrimination occurs where, because of age, A treats B less favourably than A treats or would treat others. But unlike with the other protected characteristics, there is no direct age discrimination where A can show that its treatment of B is a proportionate means of achieving a legitimate aim.
Further to this, and specifically in relation to insurance benefits, paragraph 14 of Schedule 9 to the Equality Act 2010 states that it is not unlawful age discrimination when employers make arrangements for, or afford access to, the provision of insurance or a related financial service for employees which ends when the employee reaches the greater of age 65 or state pension age. Insurance includes life assurance, health insurance and medical insurance.
The employer made provision for a permanent health insurance benefit ‘subject to the rules of such PHI Scheme’. The PHI Scheme ceased for a member on the earliest of a number of events including the member reaching the age of 65.
Mr Pelter benefited from the PHI Scheme until he reached the age of 65 at which point he stopped receiving PHI benefits.
Mr Pelter brought an employment tribunal claim for direct age discrimination based on the PHI benefits ceasing when he reached 65.
Mr Pelter claimed he was treated less favourably than an employee aged under 65 who needed PHI benefits or, alternatively, that the detrimental treatment he complained of was "inherently discriminatory on the grounds of age".
Buro sought to rely on paragraph 14 of Schedule 9 of the Equality Act 2010 and in the alternative, that any less favourable treatment of Mr Pelter was a proportionate means of achieving legitimate aims, including staff retention, succession planning, fair distribution and implementation of benefits, retaining competitiveness in the open labour market, and ensuring the smooth transition of senior executive roles.
The employment tribunal dismissed Mr Pelter’s claim on the basis that while the PHI Scheme was potentially discriminatory it was permitted by paragraph 14 of Schedule 9 of the Equality Act 2010.
The employment tribunal went on to state that had Buro not been able to rely on paragraph 14 of Schedule 9, the benefit ceasing at age 65 would have been a proportionate means of achieving a legitimate aim on the basis that paying a large sum out of its income would affect the money available for bonus and other benefits to staff which would impact the fairness of distribution of benefits and competitiveness in the labour market. The employment tribunal noted that cost alone would not be sufficient to justify discriminatory treatment.
Mr Pelter appealed and the employment appeal tribunal dismissed the appeal.
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