Enhanced redundancy payments to older workers were justified, says tribunal

The Employment Appeal Tribunal (EAT) found that the additional payments were "objectively justified" on "public interest" grounds. In addition Miss Lockwood, a former Department of Work and Pensions (DWP) employee, had not been discriminated against as there was a "material difference" between the two groups of workers that had nothing to do with age.

"The question at the first stage of the enquiry ... is whether the difference between the claimant and her comparator, here age, is material for the purpose in hand," Judge Peter Clark said in his ruling.

"That finding [by the original employment tribunal] was evidence based ... showing that the purpose of the different payments was to reflect the comparative difficulty of loss of employment suffered by the older workers (finding another job; family financial commitments) when compared with those in the younger age group."

The judge referred to a Supreme Court decision from April 2012, where the court held that a firm of solicitors could force one of its partners to retire for the public interest aims of "inter-generational fairness" and "dignity"; providing that the age specified was a "proportionate means" of achieving those aims.

Direct discrimination occurs when a person is treated less favourably that another would have been in comparable circumstances. However the Employment Equality (Age) Regulations create an exception where the treatment is "objectively and reasonably justified by a legitimate aim" and the means of achieving that aim are "appropriate and necessary".

Miss Lockwood began working for the DWP as an administrative officer in October 1999. In April 2007 her position was made redundant, and she applied for redundancy under the Civil Service Compensation Scheme (CSCS). Under the scheme, as a 26-year-old leaver with almost eight years service, she was entitled to a payment of nearly £11,000. However, if she had been over the age of 35 she would have been entitled to a further sum of over £17,000.

Employment law expert Linda Jones of Pinsent Masons, the law firm behind Out-Law.com, said that enhanced redundancy schemes of this sort were more common in the public sector and in large 'institutional' employers, such as banks.

"Under age discrimination rules, employers are able to make more generous redundancy payments to older workers as long as the way in which the payments are calculated reflects the statutory redundancy scheme," she said. "If the enhanced scheme does not reflect the statutory position it could potentially be unlawful as it will discriminate against younger workers, unless the employer can objectively justify the existence of the scheme."

She said that the EAT's decision in this case would provide "further guidance" for employers on the validity of these schemes.

"This is good news for employers who may have been concerned that they would be forced to extend their more generous redundancy terms to the entire workforce," she said. "The flip side is that it will be more difficult for businesses who have been seeking to negotiate a way out of their enhanced redundancy schemes, by saying that they may be age discriminatory to continue to run that argument."

"Most of the reported cases on this point have now concluded that, for a variety of reasons, these schemes are not unlawful. The Lockwood case is yet another confirmation of that view," she said.