Age Discrimination Case Update

The recent case of Whitham v Capita Insurance Services has held that stopping permanent health insurance benefits once an employee reached the age of 55 amounted to age discrimination. Although only a first instance decision, it is nonetheless likely to be of interest to employers.

The Facts

Mr Whitham was on long term sick leave. He was receiving benefits under a permanent health insurance scheme (PHI) provided by a third party insurance company, which ceased to pay out once the recipient turned 55.

A more favourable scheme had been arranged by the employer in 2002, the terms of which entitled recipients to payments until age 65. However, Mr Whitham was not eligible to join this new scheme, as he was ill and not “actively at work” when applying to join. The third party insurance company would not indemnify Capita in respect of payments where the employee was not actively at work.

The Tribunal’s Decision

The Employment Tribunal held that Capita had directly discriminated against Mr Whitham on the grounds of age. Capita argued that its actions were a ‘proportionate means of achieving a legitimate aim’, and that its legitimate aim was to admit as many employees into its pension and PHI schemes as possible, within the remit of the third party insurance company’s conditions. However, the Employment Tribunal did not accept this reasoning, as the offer of PHI membership was selective, in addition to the fact that by ceasing to cover Mr Whitham, the number of employees within the scheme was actually reduced.

The Tribunal also found that there had been indirect discrimination because, by applying the “actively at work” criterion, the employer had applied a provision, criterion or practice which put older employees at a particular disadvantage. This could also not be justified.

Employers should therefore be mindful that refusing benefits to older employees on the grounds that the provider refuses cover may not provide them with a defence to a claim of age discrimination.