Age discrimination: Swann v GHL Insurance Services UK Ltd

The tribunal held that the provision of a fund to provide employees with a benefits package where premiums were linked to age, was not capable of amounting to less favourable treatment on the grounds of age.

Following a survey of its employees, GHL Insurance Services introduced a flexible benefits package for its staff in February 2007 as part of its aim to improve recruitment and retention. One element of the package was private medical insurance, and employees were offered a fund, calculated as a percentage of their basic salary, which they could use to purchase benefits from the package such as private medical insurance.

Premiums for the insurance were calculated by reference to an employee’s age, gender and claims history, so premiums increased with age. However, the premiums still represented a substantial saving to the employees in comparison to purchasing private medical insurance privately.

Age discrimination claim

The claimant, Mrs Swann, chose private medical insurance from the flexible benefits package, but then discovered that although the fund would cover the premium up to the value of £462.50 per year, the total cost of the premium that she would need to cover was £631.56 per year, based on her age and gender. Swann subsequently brought a claim for age discrimination, as the premium for a younger employee would be less costly.

The minority of the tribunal accepted Swann’s submission that the treatment she was subjected to was the offering of the age-related health insurance element of the benefits package which was, therefore, discriminatory. However, by a majority, the tribunal dismissed her claim on the basis that the “treatment” was the company’s decision to make a fund available to purchase benefits from the benefits package. The calculation of this fund was age-neutral and so the treatment was not age discriminatory.

The minority of the tribunal also concluded there was no convincing evidence that the private medical insurance element of the benefits package would have had the beneficial effect on staff recruitment and retention that the company was pursuing, and so therefore the discrimination was not justifiable under the Employment (Equality) Age Regulations 2003.

However, the majority of the tribunal found that the company had demonstrated that the provision of the benefits package was a proportionate means of achieving a legitimate aim, and seemed less concerned about whether the legitimate aim itself was actually achieved. In reaching this conclusion, the majority of the tribunal considered:

  • the company’s intention of providing the benefits for the principal purpose of retaining and recruiting staff
  • the company’s use of professional advice from a consultant in identifying its benefits package
  • the use of a survey by the company’s advisers to canvas employees’ opinions regarding benefits.

Key points

  • The company’s motivation for introducing the benefits package was considered more important than whether the legitimate aim in question had been achieved.
  • The steps taken by the company to investigate and identify a benefits package which would come closest to achieving its aim of retention and recruitment clearly went a long way to convincing the tribunal that the age discrimination was justified. It is important to note that this research was undertaken before the benefits package was introduced.

What you should do

  • Keep full and detailed records of the reasons for the introduction of a benefits package.
  • Take professional advice about a benefits package and what benefits and what kind of package will best meet your aims for the introduction and maintenance of a benefits package.
  • Carry out a survey of your employees’ opinions. At the very least consult with the target employees.

Lisa Vaughan, associate, and Helen Stobbs, associate, Addleshaw Goddard

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