Award of ill-health pension could not be unfavourable treatment because of disability

The Supreme Court has dismissed Andrew Williams’ disability-related challenge to the way his early retirement pension had been calculated by Swansea University’s pension scheme.

Mr Williams complained that the enhanced element of his ill-health early retirement pension had been calculated based on his part-time salary. He argued that it should have been based on his full time salary, because it was only because of his disability that he was not able to work full-time immediately prior to his retirement at the age of 38 on health grounds. This, he said, was a case of unfavourable treatment because of “something arising in consequence of his disability”.

His argument convinced the employment tribunal, but the Employment Appeal Tribunal allowed the employer’s appeal. Mr Williams' further appeal to the Court of Appeal was dismissed, and the Supreme Court has now endorsed the Court of Appeal’s approach.

The argument that won out was based on the fact that the award of an early retirement pension on grounds of ill-health could not be described as unfavourable treatment towards a disabled person: a person who was not disabled would not be eligible for such a pension. It followed that it could not become unfavourable treatment because of the way it was calculated. In other words the fact that a full time worker who had become disabled because of a sudden illness like a heart attack would have been granted a better ill-health pension was beside the point: it was not sufficient to make what would otherwise be described as favourable treatment unfavourable.

This decision will come as a relief to pension fund trustees and employers, but it does illustrate the importance of context in interpreting the wording of the Equality Act. In these particular circumstances our higher courts clearly thought it a bridge too far to complain that what was by all accounts a generous ill-health pension could have been even better. But it does not necessarily read across into other contentious areas of disability discrimination – for example the issue of whether disabled people should be given more generous sick pay than non-disabled people, or people with different disabilities.

Where there is uncertainty, it is probably better to assume that the relevant provisions of the Equality Act are engaged, and be prepared to justify any treatment that could be regarded as unfavourable. As other recent cases have demonstrated, assuming that the Equality Act is not engaged at all when making a decision that affects a disabled worker can be a high-risk approach.

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