EAT gives guidance on the meaning of “unfavourable treatment”

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In a recent decision of the EAT in the case of The Trustees of Swansea University Pension & Assurance Scheme and Swansea University v Williams, the EAT overturned the Employment Tribunal decision that an employee had been unfavourably treated because of something arising in consequence of his disability.

Blake Morgan acted for the Trustees and University. It is a significant decision because for the first time, the EAT considered the meaning of “unfavourable treatment” and held that this was not the same as “detriment” or “less favourable treatment”.

Mr Williams suffered from a number of conditions including Tourette’s Syndrome, obsessive compulsive disorder and depression. He had worked full-time for 10 years but then, because of his disability, he asked if his hours could be reduced. By the end of July 2011, Mr Williams’ hours had been reduced by half. He successfully applied for ill-health retirement in June 2013 at the age of 38.

Under the rules of the pension scheme applicable to Mr Williams he was entitled to:

  • immediate payment of accrued pension (without actuarial reduction for accelerated receipt) in respect of the work that he had already done; and 
  • enhanced pension (again with no actuarial reduction) as if he had continued working until normal retirement age (which for Mr Williams was 67) and based on the salary received at the time of retiring.

Mr Williams complained that he had been unfavourably treated contrary to section 15 of the Equality Act 2010 because of something arising in consequence of his disability and this treatment could not be justified.

Mr Williams’ case was that it was discriminatory for him not to receive an ill-health pension based on his full time salary rather than his part-time salary. His position was that the reason he was working part-time was to accommodate his disability, and, had he been working full-time at the time of his retirement, his enhanced pension would have been twice the amount of the pension he actually received.

The Employment Tribunal upheld the claim. It held that, the meaning of “unfavourable” equated to that of “detriment” used elsewhere in the Equality Act 2010. It concluded that Mr Williams had been treated unfavourably by the rules of the pension scheme because his disability had caused him to receive a lower pension than he would have done because of his working part-time.

The Trustees and University successfully appealed to the EAT which allowed the appeal and held that the Employment Tribunal’s finding in respect of unfavourable treatment was “manifestly perverse”.

A key point in the successful appeal was that the only employees entitled to retire early and to receive an enhanced pension were those who retired through ill-health and who were disabled within the meaning of the Equality Act 2010. The pension scheme rules taken overall therefore favoured those who were disabled and (in the EAT’s judgment) it was perverse of the Employment Tribunal to conclude that the scheme was discriminatory.

Further, the University had complied with its obligations to make reasonable adjustments by agreeing to the reduction in working hours requested by Mr Williams. It would have been incongruous for the University to be found liable for operating a discriminatory pension scheme because of its compliance with the legal obligation to make reasonable adjustments. If that were the case, the University would have been required to reduce Mr Williams’ hours but also be obliged to pay him his enhanced pension without any reduction, i.e. based on his full salary.

The EAT held that the words “unfavourable treatment” and “detriment” were deliberately chosen when being included in the Equality Act 2010 and had distinct meanings. Unfavourable treatment involves an assessment in which a broad view is to be taken and which is to be judged by broad experience of life. It has the meaning of placing a hurdle in front of or creating a particular difficulty for, or disadvantaging a person because of something which arises in consequence of their disability. The appeal was allowed with the matter remitted to a fresh Employment Tribunal for a complete re-hearing.

The Trustees and University were represented by Keith Bryant QC of Outer Temple Chambers, instructed by Matthew Smith, partner at Blake Morgan LLP. Matthew Smith and Gemma Bailey (Associate) provided advice and support to the Trustees and University throughout the proceedings.