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Home / News and Insights / Blogs / Employment Law / 147: Awarding a disabled employee an enhanced ill-health pension based on his part-time salary was not unfavourable treatment

Under the Equality Act 2010, discrimination arising from disability occurs where an employee is treated unfavourably because of something arising in consequence of their disability, and the treatment cannot be justified as a proportionate means of achieving a legitimate aim.

‘Unfavourable treatment’ is not defined. In Williams v The Trustees of Swansea University Pension and Assurance Scheme and another, the Supreme Court has ruled that an employee was not treated unfavourably when he was awarded an enhanced ill-health pension based on the salary he earned whilst working part-time due to his disability, rather than his previous full-time salary.

Mr Williams was employed by Swansea University from 2000 until his retirement on the grounds of ill health in 2013, at the age of 38. For the last three years, he reduced his hours by half to accommodate his disability. Under the rules of the University’s pension scheme, Mr Williams was entitled to an ill-health early retirement pension, without actuarial deduction. He received his accrued pension, and an enhanced pension which was calculated as though he had continued to be employed until normal pension age. His benefits were based on his part-time salary at the date of retirement. Mr Williams brought a claim in the Employment Tribunal alleging that using his part-time salary, rather than the full-time equivalent, amounted to unfavourable treatment arising from his disability.

The Employment Tribunal upheld Mr Williams’ claim, noting that if he had suffered from a different kind of disability whilst working full-time (such as a stroke or heart attack), his pension would have been based on his full-time salary. Reducing his pension because he had been working part-time due to ill-health therefore amounted to unfavourable treatment arising from his disability. The Tribunal also held that this treatment could not be justified. However, both the Employment Appeal Tribunal (EAT) and the Court of Appeal rejected the Tribunal’s finding, ruling that treatment which is advantageous to a disabled person cannot amount to unfavourable treatment just because it could have been more advantageous.

The Supreme Court has now also unanimously dismissed Mr Williams’ appeal. It held that there are two key questions in discrimination arising from disability claims: what was the relevant treatment; and was it unfavourable to the claimant? The Supreme Court also noted that the Equality and Human Rights Commission’s Employment Statutory Code of Practice states that being treated unfavourably for these purposes means being put ‘at a disadvantage’, which sets a relatively low threshold. However, in this case, the relevant treatment was the award of a pension, which was clearly not intrinsically unfavourable, and Mr Williams had been treated advantageously in comparison with a non-disabled employee. Mr Williams’ argument depended on artificially separating the method of calculation and the award to which it gave rise. He was only entitled to an award because of his disability. Had he been able to work full-time, he would not have received an increased pension; he would have had no right to a pension at all.

The Supreme Court’s decision confirms that there will be no discrimination arising from disability where an employee who is treated advantageously believes that they could have been treated better. Subject to the relevant scheme rules, employers will therefore not discriminate where ill-health retirement benefits are calculated on the basis of an employee’s most recent salary and working hours.

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