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6 November 2013

Age discrimination and redundancy

The Court of Appeal has recently confirmed a decision of the Employment Appeal Tribunal (EAT) that an enhanced redundancy scheme, which discriminated against younger workers, was objectively justified.

Facts

This case was pursued by a former employee of the Department of Work and Pensions (DWP), Miss Lockwood, who took voluntary redundancy from her job as an administrative officer.  As a 26 year-old employee with 8 years’ service, she was paid an enhanced redundancy payment of £10,849.04.  Had she been over the age of 35, with the same length of service, her redundancy payment under the scheme would have been over £38,000.

Miss Lockwood brought a claim for direct age discrimination in the employment tribunal, on the basis that the enhanced redundancy scheme treated those under 30 less favourably than older employees.

Her claim was dismissed by the employment tribunal.  She appealed to the EAT, which likewise held that there was no less favourable treatment of the younger age group, including the claimant, since she had failed to establish a suitable comparator on which to base her claim.  The EAT decided that there was a material difference in the circumstances of the comparator group (employees over 35 who had been made redundant), compared with those in the age group of the claimant.  This material difference, supported by statistical evidence, was that the younger age group had fewer financial and family obligations.

The EAT also held that even had she had succeeded in showing less favourable treatment, the disparity in the amounts paid to different age groups under the scheme was objectively justified.

Miss Lockwood appealed to the Court of Appeal.

Decision

The Court dismissed the appeal.

It disagreed with the EAT on the comparator point, finding that the circumstances of the comparator group were not materially different to that of Miss Lockwood.  The EAT had wrongly taken into account factors related to age (financial and family commitments) in concluding that there was a material difference between the claimant’s age group and older workers.  These age-related factors should have been discounted and were only relevant to the issue of justification.  This meant that Miss Lockwood could establish less favourable treatment on the grounds of her age.

The Court agreed with the EAT, however, that the less favourable treatment was justified by a strong social policy objective: providing a financial cushion to reflect the additional problems experienced by older workers who lost their job.  It did not accept the argument that the scheme did not sufficiently take into account the impact of the scheme on younger workers who had family and financial commitments.

Comment

The Court’s decision has helped to clarify the question of who can be used as a comparator in showing less favourable treatment on the grounds of age.  Clearly it would present significant difficulties for claimants if factors related to age could be used to establish a material difference between the groups in question.  Instead, as the Court confirmed, such factors can only be relevant to the issue of justification.

A copy of the Court of Appeal judgment is available here.