30 Mar 2020
The Employment Appeal Tribunal (EAT) has ruled on a case involving two disabled police officers and their pensions. It was found that they suffered discrimination. A compensation payment was capped due to their receiving their pensions early.
If you want a quick summary of the case and the main takeaway points, you can skip ahead to our Too Long: Didn't Read section here.
Chief Constable of Gwent Police v Parsons and Roberts
It’s unlawful to treat a disabled person unfavourably because of their disability. They are also protected from unfavourable treatment due to something arising from their disability. It is, however, possible to justify such treatment if it can be shown to be a proportionate means of achieving a legitimate aim.
One of the most pertinent cases to this one is Williams v Trustees of Swansea University Pension and Assurance Scheme. In this case it was found that, tribunals should determine what the ‘relevant treatment’ was before considering if it was ‘unfavourable to the claimant’.
Background to the case
The claimants in this case were both disabled police officers who had achieved 23 and 18 years of service respectively.
Due to their disability, the officers were given H1 certificates. Under the Police Pensions Regulations, this enabled them to have immediate access to their pensions upon leaving the force.
The H1 certificates placed them at an advantage. Ordinarily, officers need to either have 25 years’ service or reach the age of 55 to claim their pension.
If an officer has at least five years of service, but doesn’t fall into this category, they also have an option. They can receive a deferred pension payable on the date they later retired.
As part of austerity measures, a separate voluntary exit scheme had been introduced in 2015. This allowed authorities to pay a compensation lump sum to officers who left the force voluntarily.
But there is a stipulation to this. If the office met the qualifications to claim their pension, this amount was capped at six months’ pay.
The two officers applied to leave their roles through the exit scheme. But, as they could claim their pensions through their H1 certificates, their compensation sum was capped. Had it been paid in full, the officers would have received nearly £100,000 more between them.
They later brought a claim to the employment tribunal (ET) for discrimination arising from a disability. They argued that the cap had been placed in consequence of their disability.
What did the employment tribunal say?
The tribunal upheld their claim, addressing three major issues:
- What was the unfavourable treatment?
- Did this treatment arise in consequence of a disability?
- Could it be justified?
The tribunal explained that the treatment was the application of the cap to their compensation sum. Therefore, this was ‘clearly’ unfavourable.
The organisation argued that the total amount of money the officers received would have been a ‘windfall’ when combining their pension and compensation sum. Despite this, the tribunal outlined that it wasn’t necessary to take into account the deferred pension.
This was because both sums of money were different. And, they were provided for different reasons. Therefore the pension was not relevant for these purposes.
The ET outlined that the unfavourable treatment had arisen due to the claimants previously being issued H1 certificates. Remember—this was as a result of their disability.
The tribunal considered the organisation’s argument that they had implemented the cap as a way of managing police funds.
Ultimately, the tribunal rejected this. They found that just because the claimants were in immediate receipt of their deferred pensions, it didn’t mean that their overall payments amounted to a ‘windfall’.
What did the Employment Appeal Tribunal say?
The Chief Constable of the police force appealed to the Employment Appeal Tribunal.
They argued that the claimants only ever had a right to a compensation lump sum subject to the cap. They believed that the tribunal had erred by refusing to refer to the sums that would have been received under the pension scheme. The EAT dismissed their appeal, agreeing with the reasoning of the ET.
The EAT agreed that the monetary amounts of the deferred pension and the compensation sum were separate matters. Therefore they couldn’t be linked together and labelled a ‘windfall’.
They held that the organisation could potentially have justified placing the cap. However, they would’ve needed to establish that such a ‘windfall’ was to take place.
No evidence was presented that the claimants would’ve received more from the compensation sum than they would have got had they remained in employment until retirement.
Sometimes, due to various circumstances, employees can be set to receive a large sum of money. In these situations it can be justifiable to place a cap on this amount.
However, the onus will always be on you to demonstrate that the cap is necessary. That means you need financial evidence of a ‘windfall’. Otherwise, your argument is unlikely to succeed.
Two disabled police officers applied to leave their roles through a pre-established exit scheme. This scheme allowed them to receive a compensation payment. However, because the two officers were entitled to receive their pension, as a result of their disability, this payment was capped at six months’ pay.
The two officers took their employer to an ET, claiming discrimination. The ET agreed that they were discriminated against and should’ve received both payments in full. Both sums of money were different, and for different purposes.
The EAT agreed with this ruling, stating that the two payments were separate matters.
If you find yourself in a similar situation, remember that the onus will always be on you to demonstrate that a cap is necessary. That means you need financial evidence of a ‘windfall’. Otherwise, your argument is unlikely to succeed.
Worried how this latest ruling might impact your business? Dealing with a difficult HR situation and not sure where to turn? Speak to a Croner expert today for support and guidance on 01455 858 132.
Do you have any questions?
Get a free callback from one of our regional experts today