The Supreme Court has ruled that basing a disabled employee’s pension on the number of hours he worked – due to his disability – did not amount to discrimination.
In the case of Andrew Williams v The Trustees of Swansea University Pension & Assurance Scheme and another, the Court of Appeal considered for the first time what it means to be treated unfavourably under section 15 of the Equality Act 2010.
Swansea University employed Mr Williams from June 2000 until his retirement on the grounds of ill-health in June 2013. He suffered from a disability - which fell within the meaning of the Equality Act 2010 - causing him to reduce his working hours to part-time working and then to take retirement at the age of 38, on the grounds of ill-health.
During his employment with Swansea University he was an active member of the Swansea University Pension Scheme and was entitled to an ill-health early retirement pension under the Scheme, which was a DB scheme. At the time that Mr Williams retired, the accrual rate was on the basis of Career Average Revalued Earnings and an element of the benefits was calculated by reference to final salary. Therefore, as he had been working on a part-time basis, the benefits were lower than they would have been if he had been in full-time employment when retiring due to ill-health.
Mr Williams complained to the Employment Tribunal against the trustees of the Scheme and Swansea University. He stated that - by using his part-time salary rather than a full-time equivalent - the calculation of the enhancement to his benefits after June 2013 amounted to unlawful discrimination arising from disability under sections 15 and 61[1] of the EA 2010.
An initial tribunal concluded that he had not been treated fairly since his disability was the reason he was working part-time at the point of retirement, which then led to his reduced pension benefits. The Employment Appeal Tribunal (EAT) disagreed - with Judge Langstaff saying:
“Mr Williams’ reasoning could not possibly be sufficient to establish disability discrimination. If it were, it would be difficult to see why it would not apply to a disabled claimant who applies for and secures a part time job because that is as much as he can manage, but would otherwise have worked full time.”
However, the Supreme Court has now dismissed the first ruling, stating that calculating a disabled employee’s pension based on the reduced hours he worked due to his disability did not amount to discrimination.
When commenting on the decision, Employment Partner at Trowers & Hamlins - Nicola Ihnatowicz - said:
“The policy behind an employer's duty to make reasonable adjustments is to help overcome barriers and disadvantages faced by disabled employees at work. It is not uncommon for employees who are suffering from a disability to reduce their hours, and correspondingly their pay, as a reasonable adjustment which enables them to continue working. If the employee then takes ill-health retirement, it is likely that the provisions of any defined benefit pension scheme will base the pension on their final reduced salary at retirement or a career average, without requiring employers to incur the significant cost of making up the difference.”
