In Lockwood -v- Department of Work and Pensions and The Cabinet Office, the Employment Appeal Tribunal (EAT) has endorsed the legitimacy of a voluntary redundancy scheme which provided enhanced benefits for older employees.
The claimant applied for redundancy at the age of 26, having worked at the DWP since she was 18. She was entitled to a redundancy payment under the Civil Service Compensation Scheme of nearly £11,000. However, if she had been over 35, she would have been entitled to over £17,000 more. She made a claim of direct age discrimination, but failed in the Employment Tribunal.
The EAT upheld the decision. There were material differences between the two groups – older workers would find it more difficult to find new employment and would have heavier family financial commitments than younger workers. The EAT also agreed that the different payments were justified, in that the different levels of payment were a proportionate means of achieving the legitimate aim of providing workers with a financial cushion to tide them over until they find another job – which would be harder for older workers.
The decision provides important clarification concerning this difficult issue which has troubled many employers since age discrimination legislation was implemented in 2006. It is in line with calculations for redundancy payments and basic awards for unfair dismissal which take into account both an employee’s length of service and age. When the Regulations first came into force many employers took steps to remove all of their own procedures that might result in an employee suffering an advantage or disadvantage merely because of his or her age. However, now that we have a few years’ worth of decisions concerning how protection from age discrimination works in practice, it has become clear that Tribunals will readily find that making different provisions according to the ages of employees is permissible, as long as there is a credible rationale for the approach taken.
In a commendably brief judgment (17 paragraphs) His Honour Judge Peter Clark made the following key observation:
[The Employment Tribunal was entitled] to conclude that the Respondents adopted proportionate means to achieve the legitimate aim of the Respondents to produce a proportionate financial cushion for workers until alternative employment is found when balanced against the disparate treatment of younger workers.
While employers should take the view that they need not automatically exclude any considerations or variations in the treatment of employees based on age, there must always be objective justification for the approach adopted. As always in such circumstances I strongly recommend that any employers dealing with this issue should contact us first before acting.