Case update | Capping of compensation payments under voluntary exit scheme was discrimination arising from a disability
The Employment Appeal Tribunal (EAT) has determined that the capping of a lump sum compensation paid to two police officers amounted to discrimination arising from a disability.
This case concerned two long serving police officers of Gwent Police who had been issued with ‘H1’ certificates. H1 certificates were awarded if a police officer was disabled from performing ordinary police duties, but could otherwise perform some functions. Possession of an H1 certificate enabled the holder to access a deferred pension immediately upon retiring, rather than having to wait to complete 25 years’ service or reach the age of 55. As the officers could still conduct some duties, they had not been permitted by the Chief Constable (CC) to retire on ill health grounds, so continued to work in back office roles and receive full pay.
As police officers are not technically employees, they cannot be made redundant. However, as part of austerity-era cost saving measures the CC was permitted to run a ‘voluntary exit scheme’ (the Scheme) which operated in essentially the same way as a voluntary redundancy scheme. Under the Scheme, officers were permitted to leave and receive one month’s pay for each year of service up to a maximum of 21 months. However, if an officer was already over retirement age, their compensation payment would be capped at 6 months’ pay.
The Claimants applied to exit under the Scheme and their applications were approved. Although they were both under retirement age and had not yet completed 25 years’ service, at the direction of the CC they were informed their payments would be subject to the 6-month cap. The CC’s reasoning was that, because upon leaving the Claimants could use their H1 certificate to claim their deferred pension, their payments should be capped in the same way as officers who had reached retirement age. This resulted in the Claimants receiving payments between £40,000 and £50,000 less than if the cap had not been applied.
The Claimants brought a claim of discrimination arising from disability in the Employment Tribunal. At first instance, the Judge agreed that the decision to cap the payments to the Claimants was discriminatory. The CC had not been under an obligation to cap the payments and the decision to proceed with a cap was because of Claimants’ entitlement to a deferred pension under the H1 certificates, which had been issued because of the Claimants’ disabilities.
The CC appealed this finding to the EAT, arguing that any discrimination could be justified as a proportionate means of achieving a legitimate aim, namely to prevent the officers receiving a windfall of their deferred pension. The EAT did not agree and rejected the argument that compensation under the Scheme and payment of the pension were inextricably linked. Whilst avoiding a windfall can be a legitimate reason the CC had failed to provide sufficient information supporting their justification. In particular, no comparison had been made between the uncapped compensation the Claimants were entitled to under the Scheme and the pay that the officers would have received if they had stayed in post until retirement age.
Comment: This case is a reminder that, whilst preventing a windfall can be a legitimate aim in justifying discrimination arising from a disability, this needs careful thought as sufficient evidence demonstrating how such a windfall could be calculated needs to be presented by an employer in order for such a defence to be successful.
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Amy Ling is an employment associate
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