It is permissible for employers to implement voluntary redundancy schemes that indirectly discriminate against particular age groups, the employment appeal tribunal has ruled.
The decision was made in the case of HM Land Registry v Benson, after the former closed and merged offices and established a £12 million budget to fund voluntary redundancies, while still maintaining a balance of grades and skills.
But the government department ended up being taken to court by a number of claimants aged between 50 and 54 when it failed to select them. HM Land Registry’s rationale was that it would have been costly to release them as they would have been entitled to an immediate unreduced pension.
But the employees concerned argued that applying the criterion of “cheapness”, which was recommended by the Public and Commercial Services Union, had a disproportionate impact on their age group. As a result, they decided to bring claims for indirect age discrimination.
Rachel Dineley, an employment partner and lead of the equality and discrimination unit at law firm DAC Beachcroft, said: “This decision is very welcome in illustrating (particularly in a voluntary rather than compulsory redundancy scheme) that employees who are disappointed at their non-selection are unlikely to win the support on an employment tribunal.”
If a voluntary scheme is oversubscribed, it should be remembered that applicants did not lose their jobs or any other benefits. Instead, as noted by the EAT, they simply lost out on the chance to “take advantage of a very substantial benefit on which they had no right to count and which could be described as a windfall”, she added.
Previous ruling overturned
The EAT overturned the original employment tribunal’s ruling on several counts. The initial tribunal had, for example, accepted HM Land Registry’s “cheapness” criterion as the only practicable one if it wanted to maximise its headcount reduction plan.
But it wrongly held that it was “affordable” for the government department to release everyone who had applied for voluntary redundancy, even though such a move would have meant it had to spend an additional £19.78 million.
The EAT also ruled that it was important to distinguish between a “real need” or “aim” and the means of achieving it. The original tribunal should have accepted that the Land Registry was entitled to allocate a budget of £12 million to the redundancy exercise and work within that, it said.
It was irrelevant that the government agency could have “afforded” to allocate more in an absolute sense. Therefore, the use of “cheapness” as a criterion was justified and it was a proportionate means of selection to work within the budget limit set.
The EAT likewise acknowledged that confusion could arise between the aim a given employer was pursuing and the means used to achieve it. In this case, however, because the basis of selection was not purely cost, it was not necessary to address the issue of whether HM Land Registry’s justification could have been established on the grounds of “cost alone”.
Guidance on this particular issue is likely to appear before the summer, when the outcome of the Court of Appeal case of Woodcock v Cumbria Primary Care Trust, which was heard in December last year, is made known.
