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Age discrimination
Any contractual redundancy scheme that uses age-based calculations has the potential to be discriminatory under the Equality Act 2010. However, there is an automatic exemption for schemes based on the statutory entitlement. Under paragraph 13 Schedule 9, an employer’s redundancy scheme will not amount to age discrimination if it has amended the statutory scheme in any of the following ways:
• by increasing or removing the maximum amount of a week’s pay;
• by multiplying the amount for each age band; or
• by multiplying the total amount by a figure of more than one.
For example, it is lawful for an employer to calculate redundancy payments based on one week’s pay per year of service for those aged 21 and under, two weeks’ pay for each year between the ages of 22 to 40 and three weeks’ pay for each year when aged 41 and over. The employer can also decide to base the payments on a week’s actual pay rather than applying the statutory cap, and/or multiply the amount of weekly pay by some fixed amount.
An employer is free to devise its own redundancy scheme, but if it is based on different criteria from those in the statutory scheme, the employer must be able to objectively justify it if challenged (MacCulloch v ICI plc [2008] IRLR 846 EAT). A policy that pays the same for everyone, paying every employee a month’s wages for each year of service regardless of age, for example, will not need justifying, as there will be no age discrimination.
In the following case, the EAT decided that it was not age discrimination to make more generous severance payments to older workers:
Ms Lockwood took voluntary severance from the Department of Work and Pensions under the Civil Service Compensation scheme (CSCS), aged 28. Had she been aged over 35, she would have been awarded more than double her severance payment. The EAT said that this was not unlawful age discrimination because the employer’s actions could be justified as a proportionate means of achieving a legitimate aim.
Statistical evidence showed that it was harder for the older group of workers to find work and that they were more likely to have family and other financial commitments. For an aim to be legitimate and capable of justifying direct age discrimination, it must be in the broad public interest, as opposed to simply an employer’s private interest (Seldon v Clarkson Wright & Jakes [2012] ICR 71). In this case, the employer’s desire to cushion older workers against the more severe financial impact of job loss satisfied this public interest test.
Lockwood v Department of Work and Pensions [2013] UKEAT/0094/12/RN