Denial of Permanent Health Insurance to 55 Year Old Was Discriminatory

Although insurance based benefits are an exception under the age discrimination legislation, you still have to give proper consideration to the facts in each case. In Whitham v Capita Insurance Services, the tribunal had to consider whether stopping permanent health insurance benefits once the employee had reached the age of 55 was age discrimination.

Mr Witham had been receiving benefits from Capita under a PHI scheme arranged between Capita and an insurance provider. The payments stopped when he reached the age of 55. He had not been allowed the opportunity to join a more favourable PHI scheme arranged in 2002 which would have entitled him to receive PHI payments until he reached 65. The insurance company was not prepared to indemnify Capita in respect of PHI payments if the employee was not "actively at work" when applying to join. Mr Witham was then ill and in receipt of benefits under the original PHI scheme and therefore not eligible for the new scheme.

The employment tribunal concluded that Capita had directly discriminated against Mr Witham because of his age and it could not be justified as a proportionate means of achieving a legitimate aim. Capita said that its legitimate aim was to admit as many employees into its pension and PHI schemes as possible within the constraints of the insurance company's conditions. But the tribunal did not accept this, as the offer of PHI membership was selective. Stopping the PHI payment was not an appropriate and necessary means of achieving that purported aim. By ceasing to cover Mr Witham, Capita had reduced the number of employees within the PHI scheme. This was hardly promoted its stated objective; and the employer's budgetary considerations in funding the PHI scheme were not to be taken into account.

Further, there was also a finding of indirect age discrimination because Capita applied a provision, criterion or practice (the "actively at work" criterion) which put employees over a certain age at a particular disadvantage. For the same reason as applied in the direct discrimination claim, this also could not be justified.

Finally, the employment tribunal decided that Mr Witham had a contractual right to receive his PHI payments until the age of 65 because an earlier purported variation of employment terms and the policy entitlement was ineffective.

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