More generous redundancy pay for older workers was not age discrimination

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Is it unlawful age discrimination if an employee aged 26 receives £17,000 less enhanced redundancy pay than an employee aged 35, when they have both been employed for the same length of time? Not in this case, ruled the Court of Appeal.

The case involved Ms Lockwood, who started working for the Department for Work and Pensions (DWP) aged 18. When she was 26, her position was declared redundant and she applied for redundancy under the DWP's voluntary redundancy scheme (the Civil Service Compensation Scheme).

The scheme entitled her to a redundancy payment of £10,849.04. However, under the scheme, if she had been over 35 with the same length of service (almost 8 years), she would have received an additional £17,690.58. Ms Lockwood brought a claim alleging that this was direct age discrimination because she had been less favourably treated than an employee over 35 in the same (or not 'materially different') circumstances.

The case went all the way to the Court of Appeal. The Court of Appeal held that although the Employment Tribunal (ET) had been wrong in deciding that there were "material differences" between a person aged 26 and a person aged 35, it had nevertheless been right to conclude that the discrimination was justified.

Unlike other forms of direct discrimination, direct age discrimination may be lawful if it can be 'objectively justified'.

This means that the courts will consider whether, in the circumstances, the discrimination is a 'proportionate means of achieving a legitimate aim' including whether the method used is 'reasonably necessary'.

Here the Court of Appeal concluded that it was.

Although Ms Lockwood had been less favourably treated than a person aged 35, the DWP's scheme was directed at compensating a large number of employees with differing needs from a limited pot of money.

There were sound business reasons for offering the enhanced payments.

As to how they should be allocated, the ET had considered statistical evidence about the ability of employees in the 18-24 and the 25-34 age groups to react more easily and rapidly to the loss of their jobs and obtain alternative employment compared to those aged 35-44.

It also heard evidence that those aged 35-44 were more likely to be married, have a mortgage and family responsibilities. In this context (including the fact that the trade unions had not challenged it) there was nothing wrong with the ET's conclusion that it was necessary to adopt a banding approach that would involve different treatment of people at different ages; and that the bandings chosen were appropriate.

Although the case is helpful for employers operating enhanced redundancy schemes, it is also a useful reminder about the importance of using impartial statistical evidence when considering whether any age discrimination can be objectively justified.

Case: Lockwood v Department for Work and Pensions & another