Direct age discrimination in redundancy scheme is justified by policy objectives

Direct discrimination on grounds of age is not unlawful if it is objectively justified (13(2) Equality Act 2010).  In the recent case of Lockwood v Department of Work and Pensions and another the Court of Appeal (CA) upheld the employment tribunal’s decision that an enhanced redundancy payment for older workers was objectively justified on the basis that the different treatment of an older employee was a proportionate means of achieving the aim underlying the Civil Service Compensation Scheme (CSCS).

Background

The Claimant, L, started working for the Department for Work and Pensions (DWP) when she was 18. When she was 26 her position was declared redundant. At around the same time the DWP announced a voluntary redundancy programme which was calculated in accordance with the CSCS. The CSCS operated on the basis of a banding system which meant that older employees benefitted more than younger ones. This meant that if L had been 9 years older, but worked at the DWP for the same amount of time, she would have received an additional £17,690.58. She lodged a claim arguing direct discrimination on the basis that she had been treated less favourably than an employee over 35 years old with the same length of service, who had agreed to be released from their employment under the terms of the CSCS.

Tribunal’s decision

The tribunal rejected L’s claim and held that there were material differences between L and her comparator. They relied on statistical evidence which showed that individuals in their twenties, with fewer financial and family obligations, could be expected to react more easily and rapidly to the loss of their jobs than older people. They said they were also more likely to move into other employment. Therefore, they concluded that L had not been treated less favourably than a comparator in materially the same circumstances and so there was no discrimination.

However they went on to say that, should they be wrong on this point, the treatment was still objectively justified because the legitimate aim of the CSCS was to provide proportionate financial help until the employee found alternative employment or received their pension on retirement. Using staged payments and a banding process was a proportionate means of achieving that aim. L appealed to the CA.

The CA decision

The CA held that the respective circumstances of L and her comparator, a 36 year old person who had worked at the DWP for the same amount of time, were not materially different and in fact was ‘relevant, valid and essential’ in order to determine whether L had been treated less favourably due to her age. They said that the factors which the tribunal said made the comparator materially different were actually features of being 26 rather than 36 years old. The CA found that when comparing them, L had been treated less favourably because, on leaving her employment, she was paid substantially less money than someone whose circumstances, other than their age, were identical.

However, they held that the treatment was objectively justified because, when applying a limited pot of money to what the employer assessed to be the differing needs of former employees at different ages, it was necessary to adopt a banding approach that would result in different treatment of different employees at different ages. They held that based on the evidence, the different treatment was a proportionate means of achieving the aim underlying the CSCS.

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