Flexible Benefits And Discrimination Compensation

The Employment Appeal Tribunal (EAT) has decided a significant point in relation to the effect of permanent health insurance (PHI) on compensation for discrimination.

The employer in this case had a flexible benefits scheme, which meant that employees could construct a benefits package tailored to their lifestyle. An employee on long-term sick leave was receiving PHI equivalent to 75% of his salary – this was the default position under the flexible benefits scheme, but he could have opted to reduce his cover to 50% in return for extra salary.

The employee brought a claim for harassment and disability discrimination against his employer in an Employment Tribunal and was successful. In the remedies hearing, the Employment Tribunal decided to deduct from the compensation, in respect of the PHI, 50% of salary and not 75% of salary. The employer appealed the decision on the basis that the deduction should be for the full 75% of salary.