Age Discrimination – Changes to terms and conditions justified

The Employment Appeal Tribunal (EAT) has held in Braithwaite and ors v HCL Insurance BPO Services Ltd and another case, that an employer’s decision to impose new terms and conditions was not unjustified indirect age discrimination.

The claimants transferred to HIBS Ltd under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). As a result their terms and conditions differed considerably from other employees of HIBS Ltd. This was causing HIBS Ltd financial difficulties. HIBS Ltd therefore decided to introduce standardized terms and conditions of employment for the whole of its workforce. The changes made to their terms and conditions of employment resulted in the removal of a number of benefits enjoyed by the claimants (including contractual entitlements to private health insurance, carer days and enhanced redundancy payments) and meant that their working hours would be 37 hours per week and annual leave would be 25 days a year. All employees were informed that if they did not agree to the new terms and conditions of employment, they would be dismissed on 15 June 2011.

A number of employees who were dismissed on 15 June 2011 on the basis that they did not agree to the new terms subsequently brought a claim in the Employment Tribunal stating that the new terms were unjustified age discrimination. They argued that the changes put older workers (aged 38 – 64) at a particular disadvantage because they had built up more benefits due to their length of service.

The Tribunal concluded that the requirement to enter into new terms and conditions of employment was a provision, criterion or practice (PCP) because it had been applied to persons who did not share the relevant characteristic, and when applied to the claimants and others in their age group, it put them at a particular disadvantage because the new terms meant working longer hours with inferior benefits. Therefore, unless HIBS Ltd could objectively justify such indirect discrimination, it would amount to indirect discrimination. Notwithstanding this, the Tribunal accepted the employer’s argument that the changes made were a proportionate means of achieving a legitimate aim. This aim was to reduce staff costs to ensure the business’s future viability and to have in place market-competitive, non-discriminatory terms and conditions. The claimants appealed.

The EAT held that the Tribunal had:

• correctly directed itself as to the applicable law;
• properly considered the alternative options available to the employer before concluding that none of them would have achieved the aim of necessary cost savings nor addressed the anomalies in terms and conditions;
• carried out the necessary balancing exercise between the needs of the employer and the discriminatory effect on the claimants.

Given that there was no practical alternative open to the employer, the EAT found that the PCP was objectively justified as a proportionate means of achieving the employer’s legitimate aim.

For further information on this please contact a member of the Employment Team.

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