PHI age limit was not discriminatory

Samer Cheaitou
Samer Cheaitou
Trainee Solicitor
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The Employment Appeal Tribunal (EAT) has recently upheld the decision of an earlier Employment Tribunal that the stoppage of permanent health insurance (PHI) payments to an employee upon them reaching the age of 65 did not amount to unlawful age discrimination by their employer.

Many employers take out PHI policies with insurers to provide benefits to employees if they become incapacitated and unable to work due to long-term illness.  Such contractual benefits will often see the employee paid a percentage of their gross salary (typically 50%-70%) by the insurer whilst they are unable to work.

The case in question looked at whether it was discriminatory of his employer to stop the employee’s PHI payments upon him reaching the age of 65.

The employee in this case commenced sick leave in mid-2011 and did not return to work.  The employee subsequently received PHI payments under the scheme in accordance with the scheme terms.  However, in 2020, these PHI payments stopped as the employee had reached the age of 65, which was the age at which the insurer stopped making payments under the particular PHI policy.   The state retirement age had increased to 66 in the meantime and the employee alleged that the stoppage of his payments was discriminatory.

The EAT decided that the cessation of the payments in this case did not constitute unlawful age discrimination by the employer as it was the insurer’s decision, rather than any decision by the employer, to stop the PHI payments.

While this clarification from the EAT is welcome, it is important to note that this decision is fact-specific to a degree.  Employers should therefore continue to approach decision-making in connection with employee ill health insurance arrangements with caution to minimise any prospect of age discrimination issues or allegations arising.

If you would like to discuss the implications of this case, or any other employment law matters further, please do not hesitate to contact a member of our team on 0141 331 5150.

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