The Equality Act states that employers must not discriminate against workers in the way that they provide access to benefits, such as permanent health insurance (PHI) schemes. In Pelter v Buro Four Project Services Ltd, the Employment Appeal Tribunal (EAT) held that the employer was only responsible for providing Mr Pelter with access to its PHI scheme, while the insurance company was responsible for deciding when payments would stop.


Basic facts

Under the terms of his contract, Mr Pelter was entitled to the benefit of a PHI scheme. In March 2011, the company entered into a policy which specifically stated that the benefits payable would be determined by the terms and conditions of the policy “immediately prior” to the person’s incapacity and would cease when the person reached retirement age, which at that point was 65.

Some months after Mr Pelter went on sick leave in July 2011, he applied under the scheme and started to receive PHI benefits. In January 2012, the state pension age went up from 65 to 66. In March 2017, the company transferred its PHI over to a new policy that provided cover to age 70.

Mr Pelter stopped receiving PHI benefits in March 2020 when he turned 65. He lodged a claim for direct age discrimination under section 13 of the Equality Act 2010. The company argued that the less favourable treatment was not unlawful because it was a proportionate means of achieving its legitimate aims, which included staff retention and succession planning.


Relevant law

Section 13 states that a person (A) discriminates against another (B) if A treats B less favourably than they would treat others unless A can show that the treatment is a proportionate means of achieving a legitimate aim.

Section 39(2)(b) states that an employer (A) must not discriminate against an employee in the way that they afford B “access” (or not) to “receiving any other benefit”.


Tribunal decision

Dismissing the claim, the tribunal held that the company’s obligation was to provide “access” to benefits in a non-discriminatory way, which it had done. Once the benefit was triggered, the company had no ongoing obligation to provide Mr Pelter with cover.

When Mr Pelter reached the cut-off age of 65 under the 2011 scheme, the discriminatory act was committed by the insurer, not by the company. Even if he had been subject to discrimination because of age, the cut-off date was a proportionate means of achieving the company’s legitimate aims for the purposes of section 13.

Alternatively, the company could justify its actions by arguing that the scheme fell within an exemption from age discrimination in the Equality Act that existed at that time.


EAT decision

Dismissing the appeal, the EAT held that this was clearly a case in which the company had agreed to provide Mr Pelter with access to the benefit of the PHI scheme rather than sickness benefit itself until his retirement age. As the benefits of the scheme crystallised on the date of incapacity, the fact that better insurance provision was available to other employees under a subsequent policy was irrelevant in terms of the benefits to which Mr Pelter was entitled.

During the period that the company provided Mr Pelter with access to the benefit of the PHI scheme, it was lawful for the payments to end at age 65. In any event, his state retirement age was 65 at the time he started receiving the benefits. As such, the company did not discriminate against Mr Pelter because of his age during the period it provided access to the benefit of the scheme. It was the insurer, rather than the company, that ceased payment when he reached 65, a consequence of the terms of the scheme crystallising on the date that he became incapacitated for work.