The Equality Act 2010 outlaws both direct and indirect discrimination on the ground of age, unless the employer can justify it as a proportionate means of achieving a legitimate aim. In Lockwood v Department of Work and Pensions (DWP), the Employment Appeal Tribunal (EAT) held that the DWP was justified in paying older workers more severance pay than younger workers in order to provide a financial cushion for them until they could find other work.
Basic facts
Ms Lockwood started working as an administrative officer in a benefits office at the age of 18 in October 1999. In April 2007 her position was declared surplus to requirements and she applied for voluntary redundancy. Her application was accepted and her employment ended in September 2007.
As a 26 year old leaver with almost eight years’ service, she was entitled to a payment of just under £11,000 under the Civil Service Compensation Scheme. However, had she been 35 or over, she would have been entitled under the scheme rules to almost £18,000 more.
She made a claim for direct age discrimination on the basis that an older worker with an identical length of service was entitled to a significantly larger sum than her.
Tribunal decision
However, the tribunal agreed with the DWP that there were “material differences” between her age group (under 35) and the comparator group she had relied on (over 35). The different payments reflected the difficulty older workers would have in finding another job, when compared with those in her age group.
If it was wrong on that point and she could compare her age group with employees over 35, then the DWP had objectively justified treating her less favourably.
EAT decision
The EAT said that, following the decision of the Supreme Court in Seldon v Clarkson Wright and Jakes (weekly LELR 273), tribunals have to consider, among other things, whether the objectives of the employer's policy are legitimate objectives of a “public interest nature” as opposed to purely individual reasons in a case of direct discrimination.
The question for the tribunal to ask “at the first stage of the enquiry” (the comparator issue) was whether the difference between Ms Lockwood and her comparator was “material for the purpose in hand”.
Applying that approach to this case, it held that the tribunal had not made any mistakes in law in terms of its finding about material differences. That finding was based on statistics which showed 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.
It also agreed with the tribunal that the DWP had adopted a proportionate means to achieve a legitimate aim, which was to produce a proportionate financial cushion for workers until they could find other work when balanced against the disparate treatment of younger workers.
As to the public interest consideration, the tribunal’s findings provided sound reasons to allow it to conclude that the DWP had demonstrated legitimate aims.
Comment
The EAT’s conclusion on the direct discrimination point seems surprising on first sight. To qualify for the higher payment, a person needed to be 35 or over. The treatment of Ms Lockwood therefore appears to be less favourable treatment because of age. The decision shows the need to carefully analyse whether the two comparator groups are the same – they weren’t, the EAT found in this case, because of the greater incidence of longer unemployment and family responsibilities of those in the over 35 age group. The comparator question is said to be one of fact and degree. In any event, even if there was less favourable treatment, it was found to be justified on the facts of this case.
Ms Lockwood’s case concerned redundancy payments under the Civil Service Compensation Scheme. This no longer provides for higher payments for those aged 35 or more (although immediate access to pension benefits is still age dependent). The decision should however provide some reassurance to employers who still offer different redundancy benefits on the basis of age; and trade unions can use the decision to argue that such benefits are lawful, where employers try and argue for reduced redundancy benefits for older workers because they might be discriminatory.