Exceptions to the ban on discrimination in terms and conditions

National Minimum Wage: The EA 10 allows employers to pay young workers according to the age-related pay bands set out in the National Minimum Wage Regulations 1999 without facing a claim for age discrimination. See Chapter 4 for information about the National Minimum Wage.

Service related benefits: The EA 10 contains an exception for length of service related benefits, to prevent claims for age discrimination:

• Where the length of service to trigger the benefit is five years or less, the employer is exempt from a claim for age discrimination;

• Where the length of service exceeds five years, the employer can justify the benefit by showing a reasonable belief that the scheme fulfils a business need. This could include encouraging motivation or loyalty, or rewarding experience.

Enhanced redundancy payments: It is not age discrimination to provide an enhanced redundancy payment scheme, as long as it mirrors the statutory scheme for redundancy pay. A redundancy scheme will not be age discriminatory if it amends the statutory scheme in any of the following ways:

• by exceeding (or removing altogether) the statutory cap on 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.

(Paragraph 13: Schedule 9 EA 10)

An employer is free to devise its own redundancy scheme, not based on the statutory scheme, but the employer must be able to justify it objectively as a proportionate means of achieving a legitimate aim if challenged as age discriminatory.

In Lockwood v DWP ([2013] UKEAT/0094/12/RN), a civil service voluntary severance scheme that paid older leavers more than younger leavers was not unlawful direct age discrimination on grounds of age. The EAT took into account evidence that it would be harder for the older workers to find new work and that they were more likely than their younger colleagues to have family and other financial commitments, concluding that the DWP’s policy of making more generous payments to the older workers could be objectively justified as a proportionate means of achieving a legitimate aim.

A policy that pays the same to everyone, for example, a scheme paying a month’s pay per year of service to every employee regardless of age, will not need justification, as there will be no age discrimination.

Other exceptions: The EA 10 contains other exceptions relating to benefits based on marital status and civil partnership, non-contractual maternity benefits, personal pensions and childcare benefits.