20 February 2019

Offering medical retirement based on part-time salary was not unfavourable treatment

Williams v The Trustees of Swansea University Pension & Assurance Scheme and another [2018] UKSC 65

Why care?

Section 15(1) of the Equality Act 2010 says:

"15 Discrimination arising from disability

(1) A person (A) discriminates against a disabled person (B) if –

(a) A treats B unfavourably because of something arising in consequence of B's disability, and (b) A cannot show that the treatment is a proportional means of achieving a legitimate aim."

(There is a defence if A shows that A did not know nor could be reasonably expected to know of B's disability, but this is not relevant to this case.)

The Equality and Human Rights Commission (EHRC) has published a Statutory Code of Practice which states at that being treated unfavourably means that B "must have been put at a disadvantage". Historically, tribunals have treated the concept in the same way as detriment, a term used in other sections of the Equality Act which is defined through case law as being for example when "a reasonable worker would or might take the view that they have been disadvantaged in the circumstances in which they had to work" (Shamoon v Chief Constable of the Royal Ulster Constabulary (2003)).

The case

Mr Williams had a number of psychological conditions which meant he was considered to be disabled. He worked for Swansea University for about 10 years full time, before he reduced his hours and worked another three years on a part-time basis as a reasonable adjustment to accommodate his disability. His salary was reduced accordingly for that period. After three years his medical conditions had worsened and he was unable to work at all and at 38 years old, took ill-health retirement.

Under the University's pension scheme rules, he was entitled to receive his accrued pension, as well as an enhanced pension as though he had continued to be employed to normal pension age. Both parts of his pension were based on his actual final salary at his date of retirement, with no actuarial deductions.

Mr Williams brought a claim for discrimination arising from disability because his enhanced pension was based on his part-time salary, not the full-time salary he had earned until he had had to reduce his hours because his disabilities meant he could no longer work full time. An employment tribunal accepted his claim, holding that "unfavourable treatment" and "detriment" could be equated.

The Employment Appeal Tribunal (EAT) upheld the University's appeal, finding that unfavourable treatment does not equate to the concept of detriment and remitting the case to a fresh employment tribunal.

Mr Williams appealed the EAT's decision to the Court of Appeal, which agreed with the EAT on the question of unfavourable treatment – treatment which confers advantages on a disabled person (in this case, the right to retire early on an enhanced pension) is not unfavourable treatment even though it would have conferred greater advantages had the disability arisen more suddenly. The Court of Appeal substituted a finding of no discrimination, so the case did not need to be remitted to another employment tribunal.

Mr Williams appealed to the Supreme Court, which unanimously dismissed his appeal.

Section 15 raises two simple questions of fact:

  • What was the relevant treatment?
  • Was it unfavourable to the claimant?

There is little to be gained, said the Supreme Court, in trying to draw distinctions between "unfavourably", "disadvantage" or "detriment", all used in different sections of the Equality Act. While the EHRC's Code of Practice could not replace the statutory words, it did provide "helpful advice" that the threshold for establishing unfavourable treatment is relatively low. Nevertheless, the Code did not overcome the central objections to Mr Williams' case.

There was nothing intrinsically unfavourable or disadvantageous in being awarded a pension. Mr Williams was entitled to receive his pension early only because of his disabilities, which meant he was unable to work. If he was able to work full-time, he would not have been able to medically retire, not that he would have been able to receive a pension calculated on his full-time salary.

This was not like the situation in London Borough of Lewisham v Malcolm (2008), in which the claimant was evicted from his flat. Being evicted is, in anyone's view, "unfavourable"; Mr Williams' treatment was neither unfavourable nor could it have been reasonably so regarded under the EHRC's Code of Practice.

What to take away

It is possible to see Mr Williams' point – if he had not been disabled, he would not have been able to work at all. Is it really right that he should be penalised for trying to continue to work for as long as he could? It is also possible that he would not have been able to medically retire without having at least tried part-time working – otherwise, the pension scheme might have denied that he was truly unwell enough not to be able to work.

However, the Supreme Court is clear: broadly speaking, advantageous treatment cannot be unfavourable, even though it could have been more advantageous. This will be a relief to those in the pensions industry who had been concerned about the implications for other schemes if Mr Wiliams had won his case.

The Supreme Court also says "disadvantage", "unfavourable" and "detriment" have similar meanings across the Equality Act. "Detriment" requires the court or tribunal to consider whether a reasonable worker would take the view that they have been disadvantaged.

In this case, the Supreme Court agreed that a reasonable worker would not consider themselves disadvantaged in Mr Williams' position. It is possible in a future case that a court might decide there is a difference between detriment and the other concepts if a reasonable worker did consider themselves disadvantaged – but we will have to wait and see.

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