Calculating Ill-health Pension by Reference to Part-time Salary Not Disability Discrimination

An employer did not discriminate against a disabled employee when it calculated his ill-health pension on the basis of the part-time hours he was working because he was disabled.

Speedread

An employer did not discriminate against a disabled employee when it calculated his ill-health pension on the basis of his part-time hours, which had been adjusted from full-time hours in order to accommodate his disability. He had not been treated unfavourably. In addition, it would be bizarre if complying with the duty to make reasonable adjustments under the EqA could result in the employer falling foul of the unfavourable treatment provisions.

Facts

In The Trustees of Swansea University Pension and Assurance Scheme v Williams, Mr Williams took ill-health early retirement at the age of 38. Under the pension scheme rules he was entitled to an immediate unreduced ill-health pension, based on his final salary at retirement. His employer calculated this based on his part-time hours. It had reduced his hours in order to comply with the duty to make reasonable adjustments. Mr Williams argued that his employer should have based his pension on his previous full-time salary. He claimed that this was unfavourable treatment arising from disability. 

Decision

The employment tribunal upheld the claim, finding that he had been treated unfavourably because of something arising in consequence of his disability (his part time hours). However, the Employment Appeal Tribunal (EAT) overruled the tribunal’s decision and sent it back to a different tribunal for a complete re-rehearing.

Mr Williams had not been treated unfavourably. The tribunal had missed the point that the ill-health retirement scheme only applied to disabled people. It was designed to benefit disabled people. It was perverse to conclude that the scheme treated Mr Williams unfavourably when it treated him more favourably than someone who was not disabled. Treatment which was advantageous could not be unfavourable merely because it could have been more advantageous. 

In addition, Mr Williams’ hours were reduced as a reasonable adjustment for his disability under the Equality Act 2010 (EqA). It would be bizarre if complying with the duty to make reasonable adjustments under the EqA could result in the employer falling foul of the unfavourable treatment provisions. 

Implications

Benefit schemes which only benefit disabled employees will not fall foul of disability discrimination laws if they treat some disabled employees less favourably than others. In addition, an employee should not be able to complain of unfavourable treatment if the treatment is a consequence of the employer complying with the duty to make reasonable adjustments.