On Medical Retirement

Faced with an employee who, because of their health, is unable to perform their role or give regular effective service in the future suggest that they should be medically retired rather than dismissed. This is entirely reasonable and understandable – medical retirement will often give an employee a better financial payoff than they would receive if they were dismissed on inefficiency grounds (where often the employee would just receive payment in lieu of notice). In addition, simply leaving by agreement rather than having to face the ignominy of being dismissed is itself of some benefit and consolation to an employee.

One issue that members often raise when they know that they face a good prospect that they will be dismissed on inefficiency grounds is whether, as a reasonable adjustment, the employer should consider medical retirement as a reasonable adjustment (assuming, of course, there is in fact a medical retirement provision in the pension scheme). The simple answer is this will not be a reasonable adjustment as can be seen in the EAT case of Tameside Hospital NHS Foundation Trust v Mylott. Mr Mylott was absent on long term sick following an experience of alleged bullying by his managers. The employer’s policy required consideration of ill health retirement before dismissing an employee and the employment tribunal found that Mr Mylott had been unfairly dismissed because of this failure but also that not facilitating an ill health retirement application was also a failure to make adjustments.

The employer appealed and, in paragraph 53 of the judgement, the reasons why it is not a reasonable adjustment are set out very clearly:

the Trust’s case is that there was no reason to suppose that facilitating an application by the Claimant for ill-health retirement would have helped to ensure his return to work.  That is self-evidently true: ill-health retirement involves leaving the job, not doing it … We can identify in such a case no “provision, criterion or practice” which has an adverse “effect” on the employee which offering him ill-health retirement would prevent or mitigate.  The whole concept of an adjustment seems to us to involve a step or steps which make it possible for the employee to remain in employment and does not extend to, in effect, compensation for being unable to do so.

I think that decision is plainly correct. It is noteworthy though that the same EAT did still reject the employer’s appeal against the unfair dismissal finding.

So, does that mean an employer’s failure to offer medical retirement cannot be discrimination? I do not think it does and it is not hard to envisage such a scenario since both section 15 and 19 of the Equality Act 2010, unlike section 20, do not need to be concerned with aiding an employee back to work. For example, if an employer regularly omits to refer cases where ill health retirement is a possibility, perhaps as a cost saving measure, this may be a practice that especially places disabled employees at a particular disadvantage (if you’re at risk of being dismissed for a permanent inability to do your job because of your health it will be a relatively rare case that disability is not an issue) so that this would amount to indirect discrimination. Similarly, if a disabled person is denied the opportunity to be considered for ill health retirement this may well amount to unfavourable treatment arising from disability. These issues have not though, to my knowledge, been considered by any appellate tribunal.

Even though seeking to help a disabled person retire from service on favourable terms is not a reasonable adjustment in employment law and the possibility that it amounts to other forms of discrimination is uncertain that does not mean it is is unenforceable.

As was seen in Tameside an employer’s failure to follow a procedure that required consideration of medical retirement can make a dismissal unfair; the leading case in this regard was First West Yorkshire Limited t/a First Leeds v Haigh.  The EAT found, at paragraph 48, that in a dismissal context “fairness requires the reasonable employer to give proper consideration to an ill health retirement scheme before he dismisses for long term sickness.” In short, if there is an ill health retirement scheme in an employee’s pension scheme the employer should give consideration to this before dismissing an employee on inefficiency grounds.

In practice however, if an employee knows that dismissal is on the horizon it may well be in their interests to take the initiative and formally communicate (in writing) to the employer that they wish to be considered for medical retirement, or indeed make an application themselves if the scheme allows this.

Of course, aside from an employment law area employees may well find they also have grounds to make a complaint of maladministration to the Pensions Ombudsman if an employee is deprived of the opportunity to apply to be medically retired, or a decision is taken not to proceed without adequate medical information.

 

Cases Referenced

Tameside Hospital NHS Foundation Trust v Mylott [2010] UKEAT 0399_10_1304

First West Yorkshire Ltd (t/a First Leeds) v. Haigh [2008] IRLR 182

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