London North Eastern Railway (LNER) did not unlawfully discriminate against four long‑serving train drivers when it declined to award them ill health benefits, an employment tribunal has found.
The drivers had argued that LNER failed to make payments under the Ill Health Severance Arrangements (IHSA) because each of them was over the age of 65 when their employment came to an end.
LNER maintained that the IHSA scheme includes a clear upper age limit of 65 years, which it said provided an objective justification for the decision and meant the outcome was not based on age.
The tribunal was told that all four men had worked as drivers for more than four decades before their dismissals. Over the course of their employment, the operator had passed through various ownerships, including periods of public control, with their contractual terms transferring under Transfer of Undertaking (Protection of Employment (Tupe)) each time.
The employer’s pension scheme offers different entitlements depending on the section to which a member belongs. All four claimants were in Schedule Eight, regarded as the most favourable section because it allows members to draw their full pension from the age of 64.
According to IHSA rules, a driver who receives a redundancy payment when their employment ends cannot also receive additional sums such as lump‑sum payments, even if the departure is due to ill health. The scheme also imposes caps on payments, including a rule that anyone aged 65 or above is not eligible for IHSA support when their employment terminates.
Although compulsory retirement was formally abolished in 2011, LNER continued to operate a retirement age of 65 for some time afterwards, considering requests to work beyond that age individually. The operator has since ended compulsory retirement, but older drivers may continue working only if they pass an annual medical examination.
None of the claimants, whose employment ended by reason of ill-health retirement, disputed the grounds for their dismissal. They argued instead that the age cap amounted to unlawful age discrimination, particularly as each had already reached the maximum 40 years of reckonable service under the pension scheme.
They highlighted that younger employees had received IHSA payments in their early 60s, and contended that “a driver dismissed for ill-health reasons who had no access to any alternative source of income would be in greater need than a driver dismissed in the same circumstances who did have access to an alternative source of income”.
They also referred to two drivers who had received IHSA payments after the age of 65, a fact widely known among staff and a source of frustration. LNER accepted that one of those payments had been a mistake, while the other had been triggered when the employee was still 64 and, therefore, eligible.
The claimants further argued that the sweet spot for IHSA entitlement fell between the ages of 50 and 60, and that the agreement negotiated with unions was out of date and no longer aligned with current legislation. However, despite evidence that some drivers had received payments beyond the age limit, the judge found this did not provide a sufficient basis for an age discrimination claim.
Employment judge Loy said: “It is perfectly understandable why the claimants felt aggrieved about this inconsistency. The respondent accepted that this treatment was inconsistent, at least in the case of the [driver] which they said was a mistake.”
The tribunal ultimately held that LNER’s reasons for imposing an age cap were ”rational, not arbitrary and capable of being understood”, noting that the operator sought to maintain fairness between generations and to distribute its resources in an equitable way.
This article is based on a piece written for Personnel Today
