An employment tribunal has ruled that stopping the payment of sickness absence benefit once an employee turns 55 is age discrimination.
It ruled that Capita Insurance Services (a subsidiary of Capita) was wrong to stop the permanent health insurance (PHI, commonly known as income protection) payments to its employee Mr Whitham at age 55 instead of continuing on to 65 because he was not "actively at work".
Mr Whitham had been denied the opportunity to join a more favourable PHI scheme arranged in 2002 which would have entitled him to receive PHI payments until he turned 65.
The insurance company (Unum) was not prepared to indemnify Capita Insurance Services in respect of PHI payments if the employee was not "actively at work" when applying to join.
Mr Whitham was then ill and in receipt of benefits under the original PHI scheme and therefore not eligible for the new scheme.
Mr Whitham contended that this was age discrimination against anyone aged over 45.
Employment Judge John Hunter agreed.
He decided that Mr Whitham 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.
In his ruling, Judge Hunter said: "The issue can be decided by asking the following simple question. But for his age, would the claimant still be in receipt of PHI payments? The answer is clearly in the affirmative."
Wrigleys Solicitors director of employment law John McMullen said: "It was held by the employment tribunal that Capita had directly discriminated against Mr Witham because of age.
"Nor could this be justified as a proportionate means of achieving a legitimate aim. The employer stated 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 that the employer had this as an aim, as the offer of PHI membership was selective.
"Nor was stopping the PHI payment an appropriate and necessary means of achieving that purported aim. By ceasing to cover Mr Witham the employer had reduced the number of employees within the PHI scheme. This was hardly promoting its stated objective; and the employer's budgetary considerations in funding the PHI scheme were not to be taken into account."
McMullen added that indirect age discrimination was also in action because the employer applied 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," he added.
