Ill-Health Retirement, Pension Rights and Disability – Supreme Court Ruling

Posted: 2nd January 2019

If an employee has to move to part-time work due to his or her disabilities, how does that affect the calculation of his or her pension rights on taking ill-health retirement? The Supreme Court considered that issue in a guideline discrimination case.

The employee concerned worked for a university for 13 years. He suffered from Tourette’s syndrome and other conditions that satisfied the definition of disability under Section 6 of the Equality Act 2010. As a result of his disability, he had to work part time for the final three years of his employment. When he took ill-health retirement at the age of 38, he was working half his full-time hours and was paid commensurately. On retirement, he started to receive his pension.

There was no dispute as to the correct calculation of his basic pension. However, he was also entitled to a pension enhancement, the amount of which was calculated on the basis of his final, part-time, salary as at the date of his retirement. He argued that that approach amounted to unfavourable treatment because of something arising in consequence of his disabilities, namely his inability to work full time. Although that argument initially succeeded before an Employment Tribunal, it fell on fallow ground before the Employment Appeal Tribunal and the Court of Appeal.

In dismissing his appeal against the latter ruling, the Supreme Court noted that there was little to be gained by seeking to distinguish the word ‘unfavourable’, in Section 15 of the Act, and concepts such as ‘disadvantage’ or ‘detriment’ found elsewhere in its provisions. The fundamental objection to the employee’s case was that there was nothing intrinsically unfavourable or disadvantageous about the award of the ill-health pension.

The only basis on which the man was entitled to such a pension was by reason of his disability. Had he been able to work full time, the consequence would have been not an enhanced entitlement but no immediate right to a pension at all. In those circumstances, the award could in no sense be viewed as unfavourable.