Age not a problem

ABN AMRO Management Services Ltd and Royal Bank of Scotland v Hogben

Although the age regulations exempt length of service criteria of five years or less, those in excess have to be justified. In ABN AMRO Management Services Ltd and Royal Bank of Scotland v Hogben, the Employment Appeal Tribunal (EAT) said that employers have to be able to justify the feature of the scheme that impacts on the claimant.

Basic facts

Mr Hogben held a senior post at ABN AMRO. Following the takeover of the bank in mid 2007 by a consortium led by the Royal Bank of Scotland, it was clear there would be redundancies. Mr Hogben (who was 42) was considered - unsuccessfully - for three roles and dismissed for redundancy with effect from August 2008.

In November 2008 he lodged a number of claims for age discrimination on the basis that the bank had:

1. favoured older employees for the jobs for which he had applied
2. withheld a pro rata bonus as a result of a change in policy which favoured older employees
3. operated an enhanced redundancy pay policy which favoured younger employees
4. refused to pay his enhanced redundancy payment unless he signed a compromise agreement

The Bank applied to strike out all Mr Hogben’s claim but the employment judge refused to strike out the first three. The Bank appealed against that decision and Mr Hogben cross-appealed against his fourth claim being struck out.

EAT decision

In relation to the first claim, the EAT pointed out that one of the successful applicants was actually younger than Mr Hogben and another was only nine months older. According to a note from one meeting, the person dealing with the applications had estimated that Mr Hogben was aged somewhere between 38 to 48, the age bracket of the successful candidates. There was therefore no evidence that age had played any part in the selection process and this claim should have been struck out.

Nor did the EAT find any evidence to support Mr Hogben’s claim in relation to the bonus. Until April 2008, ABN AMRO had operated a discretionary policy whereby employees made redundant could receive a pro rata amount of their annual bonus. This was then changed by RBS so that payments would only be made in exceptional circumstances. Mr Hogben argued that this change in policy favoured senior (and generally older) employees who had been made redundant before anyone else in late 2007 and early 2008. The EAT said this did not constitute age discrimination as the broad picture showed that age was not a factor and this claim should also have been struck out.

The EAT did, however, agree that he had an arguable point in relation to the length of service element in the firm’s enhanced redundancy policy which gave all employees nine months’ pay plus a month for each full year of service over nine years, as well as pay in lieu of notice. As Mr Hogben had been at the bank for 12 years, he received 12 months’ pay, plus three months’ in lieu of notice. He argued that this was discriminatory against younger employees, and claimed another nine months’ redundancy pay reflecting his “disregarded nine years of service”. The EAT said that employers have to be able to justify the feature of the scheme that impacts on the claimant. In this case, a bias in favour of older employees as a result of the weighting given to longer service. The tribunal was right not to strike out this claim.

Finally, the EAT said that it could not see how it was discriminatory to offer an enhanced redundancy payment in return for an agreement not to pursue other claims as it affected everyone the same way and did not put people in any given age group at a particular disadvantage. Even if it was discriminatory, employers could justify the practice on the ground that they wanted to “achieve finality with regard to all issues arising out of the dismissal of an employee”. The tribunal had also been correct to strike out this claim.