The EAT dismissed the appeal in Smith -v- Gartner UK Ltd 2016, holding that an employer who provided a permanent health insurance (“PHI”) scheme which only covered an employee to the age of 60 had not directly discriminated on the ground of age. The employer’s contractual obligation was limited to providing an insured long-term health/disability scheme, while the specific terms of that insurance scheme were provided by the insurer. 

Ms Smith made a claim for direct age discrimination following the cessation of payments made to her under Gartner’s PHI scheme when she turned 60. This was in line with the PHI policy which had been in place when Ms Smith joined the Gartner in 2003. Ms Smith argued she should benefit from the new PHI policy introduced in 2007 which covered eligible employees up to the age of 65. (An employee was not eligible to claim under the 2007 scheme if they were not working immediately before any potential claim under it and Ms Smith fell into this ‘ineligible’ category).

It was necessary to look at the cause of the act, or the failure to act, which had led to less favourable treatment of an employee. Ms Smith did not come under the new insurance scheme because she was not working in the period immediately before any potential claim under it - this had nothing to do with her age. Furthermore, the term that stated that payments would cease at 60 was the insurers’, not Gartner’s, and as such the cessation of payments was not discrimination by Gartner.

This case is a helpful reminder that a PHI clause should be drafted carefully to limit the employer’s potential liability if the individual is no longer covered by the scheme rules (in this case, Mrs Smith had no contractual entitlement to PHI as the commitment in the contract was only to provide PHI subject to the rules of the insurance policy).