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Age Discrimination in Redundancy Payments

Thursday, 6 February 2014

Age is one of the protected characteristics under the Equality Act 2010. Individuals cannot therefore be discriminated against due to their age meaning that they cannot be treated less favourably than another person due to an age difference.

An important proviso exists to this rule however whereby an individual or organisation will not discriminate against a person on grounds of age if their treatment of that person is a proportionate means of achieving a legitimate aim.

This proviso was recently tested by the Court of Appeal in Lockwood v Department of Work and Pensions [2013] in relation to a voluntary redundancy scheme set up by the Department of Work and Pensions (DWP).

Background to Lockwood v Department of Work and Pensions [2013]

Ms Romilly Lockwood joined the DWP as an administrative officer in the benefits agency in 1999 at the age of 18. In 2007 her position was declared surplus and the DWP announced a voluntary redundancy scheme to which she applied successfully. Under that programme she was entitled to compensation in accordance with the Civil Service Compensation Scheme (CSCS).

The CSCS provided that a leaver of Ms Lockwood’s age, 26 years old, with her length of service, 8 years, should be entitled to a payment of £10,849.04. However, an older worker over the age of 35 but with the same length of service would have been entitled to £17,690.58. The banding was designed to be ‘most generous for those whose need was greatest’.

Ms Lockwood brought a claim for age discrimination under The Employment Equality (Age) Regulations 2006 (SI 2006/1031) which have now been consolidated in the Equality Act 2010.

Why Ms Lockwood’s Age Discrimination Claim was Rejected

There were two questions considered by the employment tribunal. Firstly it considered whether in fact there had been discrimination. Secondly it considered whether, if there had been discrimination, that discrimination could be objectively justified. The tribunal held that there had been no discrimination because there were material differences between the circumstances of Ms Lockwood and her comparator and it also held that any discrimination would be justified even if it had existed.

The Court of Appeal rejected the first conclusion of the employment tribunal suggestion it was “wrong to conclude that there was a material difference between the age groups ‘under 30’ and ‘over 35’ on account of differences in working flexibility and financial commitments”. However, it upheld the conclusion that discrimination was justified as a proportionate means of achieving a legitimate aim.

The court’s reasoning relied on the aim of the CSCS which was to “produce a proportionate financial cushion until alternative employment was found, or as a bridge to retirement and the receipt of a pension”; both the employment tribunal and the Court of Appeal held that the means of doing so by way of staged payments and a banding process was a legitimate aim.

For more advice in relation to redundancy or discrimination at work please contact Aneil Balgobin via e-mail ABalgobin@rollingsons.co.uk or by telephone on 0207 611 4848.

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