D Pelter v Buro Four Project Services Limited

An employer who agrees to provide an employee with access to permanent health insurance does not thereby undertake to fund sickness benefits itself. Access continues while the insurance benefit is available, but ends when incapacity triggers a claim. Thereafter payment is governed by the insurer’s crystallised policy terms.

Where access to a scheme ending at age 65 was lawful when provided under paragraph 14 of Schedule 9 to the Equality Act 2010, the employer does not commit direct age discrimination merely because the insurer later stops payments at 65 under those frozen terms.

The claimant was a director and employee of the respondent. His service agreement required the respondent to effect permanent health insurance, subject to the rules of the relevant scheme. The UNUM policy in force when he became incapable of work in July 2011 fixed his entitlement by the policy terms immediately before incapacity and provided a terminal age of 65.

Although the claimant’s state pension age later increased to 66, UNUM ceased benefit payments when he reached 65. The Employment Tribunal, London Central, dismissed claims of direct and indirect age discrimination. The claimant appealed only the dismissal of the direct discrimination claim, principally contending that the respondent remained responsible for access to PHI benefits and their cessation.

1. Appeal dismissed. The Employment Tribunal was correct to reject the direct age discrimination claim.

2. The service agreement required the respondent to provide access to the benefit of a PHI scheme. It did not oblige it to pay sickness benefits itself until retirement age. The agreement was expressly subject to the rules of the scheme and its availability at standard rates.

3. Access was not confined to the initial opportunity to join the scheme. It continued while the respondent provided the benefit of the scheme. However, once the claimant became incapacitated and the insured risk occurred, the position crystallised. The insurer’s policy terms then governed payment, and the employer could not obtain replacement insurance for an event that had already occurred.

4. When the respondent provided access to the scheme, a PHI scheme under which benefits ended at 65 was permitted by paragraph 14 of Schedule 9 to the Equality Act 2010. The claimant’s state pension age was also then 65. The respondent therefore did not discriminate against him during the period when it afforded that access.

5. The cessation of payments at 65 was an act of UNUM under the frozen policy terms, not a new decision or detriment imposed by the respondent. The arguments concerning EU law, justification, transfer to a replacement scheme, limitation and adequacy of reasons disclosed no error of law. The tribunal was entitled to regard the original choice of scheme as the alleged act and to refuse a just and equitable extension of time.

• Employment Appeal Tribunal: Dismissed the claimant’s appeal from the Employment Tribunal, London Central.
• Employment Tribunal, London Central: Dismissed the claimant’s claims of direct and indirect age discrimination concerning cessation of PHI benefits at age 65.