UK: Disability discrimination: rulings on unfavourable treatment and PHI benefits

• The Supreme Court has upheld a Court of Appeal decision that treatment of a disabled employee which is advantageous (permitting ill health early retirement) cannot be viewed as unlawful 'unfavourable treatment' due to disability simply because it could have been more advantageous. In this case the pension was based on the part-time hours the employee had changed to pre-retirement, as a reasonable adjustment for his disability, rather than full-time hours. However, had he been able to work full-time, he would not have been entitled to retire early at all. (Williams v The Trustees of Swansea University Pension & Assurance Scheme)
  

• The case of Awan v ICTS UK serves as a reminder to employers providing PHI benefits to ensure the obligation to pay out is subject to the terms of the insurance policy and conditional on the insurer paying out under the policy. There were no such provisions in the contract in this case and therefore the new employer following a TUPE transfer was liable to continue the payments where the transferor's insurer refused to do so (and unfortunately the new employer had not obtained warranties or indemnities from the transferor to cover this).

The employer's consequent decision to dismiss was in breach of contract: applying previous case law, the EAT implied a term that the express right to terminate on notice could not be exercised on grounds of incapacity where it would frustrate an existing entitlement to PHI payments. The case was remitted to determine whether dismissal was also unfair and disability discrimination. Employers may wish to include an express clause in their employment contracts permitting dismissal for incapacity notwithstanding the effect on PHI benefits, although this somewhat destroys the purpose of the benefit and its efficacy has not yet been tested in the courts.