Exclusion from voluntary redundancy of director aged over 50 was discriminatory

Mr Donkor was born in 1960 and started his employment with the Royal Bank of Scotland in 1978. He worked through the ranks and, from 2003, was employed as a regional director in retail banking. In 2012 there was a bank restructure which effectively meant that all existing regional directors would have to go through a selection exercise. Following a “desktop exercise” those not selected for interview would be given an options letter, allowing them to volunteer for redundancy. Those aged over 50 would also be given the option of early retirement.

Mr Donkor and three others were not offered an interview. He was one of two of the four over 50. However, when severance costs were calculated it was apparent that out of a total cost if £1.4m, £1.25m would be accounted for by the two employees aged over 50. In Mr Donkor’s case the overall cost would be £552,286.87, including a pension contribution of £460,275. The Bank reviewed the process and offered interviews to those who were initially successful. the result was that one of the four was successful. Mr Donkor was not. the value of Mr Donkor’s proposed settlement required approval at a higher level. While this process was ongoing the two other employees, both under 50, were given letters inviting them to apply for redundancy or redeployment. Mr Donkor was not sent such a letter.

In May 2012 an alternative role became available. He and Mr Batey (one of the employees under 50) were considered to be suitable candidates. Mr Donkor was notified accordingly and asked whether redundancy options were available. He was told that they were not since there was a suitable alternative role. He was offered and accepted the role before the selection exercise concerning him and Mr Batey was conducted. He remained in post until a further unrelated restructuring in 2013. In the meantime the bank changed its pension rules so that the minimum age at which volunteers for redundancy could apply for early redundancy was raised from 50 to 55. Within the 2013 restructure he was permitted to apply for voluntary redundancy and his employment terminated in September 2013.

He brought a claim of age discrimination on the basis that in the 2012 exercise he was not given the option of voluntary redundancy whereas comparable employees aged under 50 were. At the Employment Tribunal it was held that the employees aged under 50 were not appropriate comparators because they could not apply for voluntary early retirement. Alternatively, bearing in mind that Mr Donkor was not offered the option of voluntary early retirement so they were all treated in the same way. Further, even if there was less favourable treatment the reasons were the considerably higher cost and the likelihood that such a package would not be approved when there was suitable alternative employment. Accordingly, his claim failed. However, on appeal the Employment Appeal Tribunal disagreed with the Employment Tribunal and noted that the ET “lost its way when it came to this particular aspect of the direct age discrimination claim before it”.

beware of rash promises

Regular readers will no doubt recall the pickle that Dresdner Bank found itself in when making extravagant promises to city bankers in London. In July 2012 I reported that Dresdner Bank was facing a payout of up to £42 million when the High Court decided that a promise made by the CEO at a meeting was sufficient to create a binding contractual obligation. Unsurprisingly the bank appealed the decision to the Court of Appeal but to no avail, as I reported a year later.
Back to the present and British Telecommunications plc v Luck is an interesting case as it addresses the tortious liability of an employer in relation to negligent or fraudulent misrepresentation. Unlike Dresdner, the question in this case was not one of whether the employer should be held to something it didn’t want to but whether the employer should be held to a promise which turned out to be wrong. The essence of this case was that as part of the process of a TUPE transfer, staff at BT were assured that their participation in the BT pension scheme would be unaffected by the transfer. What in fact happened was that BT sold its shareholding in the transferee company in which had entered into a joint venture and the transferred staff’s membership of the scheme ceased. The alternative scheme offered less generous benefits and the employees brought a claim for misrepresentation.
Faced with the claim BT argued that the representations they had made were true; alternatively that they had an honest and reasonable belief that they were true. As for losses it was argued that the joint venture was inevitable and there was nothing the employees could have done to negotiate the opportunity to remain within the BT pension scheme.
In addition to Dresdner this case has echoes of Minter v Julius Baer[2004] EWHC 2472 (Ch) , decided some ten years earlier, wherein Mr Minter attempted, unsuccessfully, to argue that Julius Baer had made promises as to the level of his future pension to tempt him from his then employer, the doomed Barings.

October 2012 wage rates and contributions and the final demise of the state retirement age

As most readers are no doubt aware national minimum wage rates were subject to their usual increase on 1 October. The main rate has increased from £6.08 to £6.19.
The rates for workers aged 16-17(£3.68) and 18-20 (£4.98) are unchanged this year.
The apprentice rate has increased from £2.60 to £2.65 and the accommodation offset (which employers providing accommodation can set off against the minimum wage) has increased from £4.73 to £4.82 per day.
The TUC has pointed out that those on the minimum wage (who are mainly women) will experience a net drop in spending power in real terms, taking into account that the rise in the main rate is 1.8% whereas RPI inflation is currently 2.9%. General Secretary Brendan Barber commented:
While we are pleased that Government has rejected the siren calls of some employers to freeze the minimum wage for adult workers and apprentices, these increases are still far below inflation and will leave the lowest-paid facing a real terms cut.
These new rates are a particular blow to younger people who will face the biggest hit on their living standards. There is no evidence that the minimum wage has had an adverse impact on young people’s employment so it is hard to see the logic behind their pay freeze.
[These] increases do not do enough to help hard-pressed families. We need a bolder increase next year otherwise the real incomes of minimum wage workers will continue to fall, along with consumer demand.
Also on 1 October auto-enrolment came into force for the biggest employers

pension rights of part-time judges

Of direct personal interest to a minority of our readership – albeit a very important one(!) – is O'Brien v Ministry of Justice in which the European Court of Justice (ECJ) dealt with a long running case on the question of whether part-time fee paid judges are entitled to the protection afforded to part time workers by the EU Part Time Workers Framework Directive 97/81/EC. It arises because while full time judges, and salaried part time judges, are entitled to pensions as part of their terms of service, no pension provision is made for judges who work on a fee-paid sessional basis.

new pay rates, tribunal award limits and postponed pension provisions

New statutory pay rates
From 1 April the standard rate of statutory maternity, paternity and adoption pay increases from £128.73 to £135.45 per week.
From 6 April the standard rate of statutory sick pay increases from £81.60 to £85.85 per week. It is also expected that the basic state pension will increase from £102.15 to £107.45 in April.

Increases in maximum tribunal awards and "a week’s pay"
The maximum unfair dismissal award is to increase from £68,400 to £72,300