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Disability and Early Retirement - What Constitutes Unfavourable Treatment?

on Friday, 21 December 2018.

As an employer, are you discriminating against a disabled employee if you are basing your early retirement pension calculations on their adjusted, reduced hours of work?

What Happened?

Mr Williams was employed by Swansea University. His working hours were reduced to part time as a reasonable adjustment in light of a medical condition that amounted to a disability under the Equality Act. Mr Williams applied for ill health early retirement, which was granted when he was aged 38. As a result of his early retirement, Mr Williams started to receive his pension under the terms of Swansea's pension scheme..

Mr Williams claimed that the calculation of his pension amounted to unfavourable treatment since it was based on his part time salary and he was only working part time because of his disability. The tribunal agreed, but the Employment Appeal Tribunal (EAT) and the Court of Appeal did not.

The Supreme Court

This week, the Supreme Court confirmed that it was not discrimination arising from disability to calculate Mr Williams' pension by reference to his part time hours. In particular, the Court found that Mr Williams had not been subjected to any unfavourable treatment. Had he not been disabled, he would not have been entitled to a pension at all at that time. The treatment was therefore not in any sense unfavourable, nor could it reasonably have been so regarded.

What Does This Mean for Employers?

This judgment is good news for employers and pension providers. Subject always to the rules of the particular scheme involved, an employee will not suffer discrimination where ill-health retirement benefits are calculated on the basis of their most recent salary and hours worked.

Have you got any question on discrimination issues? Please contact Helen Clayton in our Employment Law team on 0117 314 5457.

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