Employers can justify a claim of indirect discrimination by showing that it was a “proportionate means of achieving a legitimate aim”. In HM Land Registry v Benson, the Employment Appeal Tribunal (EAT) said that relying on cost as the criterion in a redundancy exercise can constitute a ““legitimate aim”, even if it had a disproportionate impact on a particular age group.
Thompsons was instructed by the PCS union to represent Mrs Benson and her colleagues in relation to the appeal.
As part of a cost cutting exercise, the Land Registry offered a voluntary redundancy / early retirement scheme with enhanced benefits to employees at three offices that it wanted to merge. It made clear that the budget was limited and that not everyone who applied would automatically be accepted onto the scheme.
It had set aside £12 million to cover the cost of the redundancies. The scheme was heavily over-subscribed, which would have resulted in a shortfall of £19.7 million had it accepted everyone. It therefore decided to pick those employees who were the cheapest to make redundant, while trying to maintain a good balance of grades.
Five employees, all aged between 50 and 54 who would have been entitled to an unreduced pension until the normal pension age of 60 (and who were therefore expensive to make redundant), claimed that using the criterion of cost to choose who could leave constituted indirect age discrimination.
The tribunal agreed that using cost as the main criterion had worked to the disadvantage of employees in the 50 to 54 age group. It also accepted that the aims of the scheme were legitimate, in that the Land Registry needed to reduce the size of its workforce while keeping the right balance of experience and keeping costs down.
However, the tribunal said that the Registry could not justify the scheme because it could have avoided the problem of discriminating against Mrs Benson and her colleagues by agreeing to accept everyone who had applied.
Although there would have been additional costs, it had not shown that these were “unaffordable”, nor that they were “disproportionate to the benefit to the claimants in terms of eliminating the discriminatory impact.”
it therefore upheld the claims of age discrimination.
However, the EAT disagreed, saying that the real question was whether adopting cost as a criterion “was a proportionate means” for the Land Registry to meet its £12m budget limit. As the tribunal itself had found that cost was the only “practicable criterion”, it was hard to escape the conclusion that its use must be justified.
And as the tribunal had also found that the £12m budget was a ‘real need’ constituting part of a ‘legitimate aim’, it was irrelevant whether the Land Registry could have afforded to allocate more to the overall pot.
In any event, the test was not whether more money was available, but whether the employer’s decision about how to allocate their resources (particularly financial resources) constituted a “real need” or “legitimate aim”.
Although the tribunal was entitled to assess whether the means the Land Registry had chosen were proportionate to achieve its aims, the fact that it had found that there was no other practical alternative meant that the selection criterion it chose was, by definition, a proportionate means of achieving them.
At first sight this case appears to back-track from the earlier helpful case of Pulham v London Borough of Barking and Dagenham (see weekly LELR 148). The EAT distinguished that case by pointing out that Pulham was concerned with a directly discriminatory pay provision which it argued was "too expensive" to remove - but it was only “too expensive” because the budget it had allocated for that purpose was too limited.
The Benson case, on the other hand, concerned a budget for a redundancy programme which was not directly discriminatory; which required a selection exercise; and in which the tribunal had found that cost was the only practicable criterion the Land Registry could use to select employees for redundancy. The EAT noted that “not all measures with a discriminatory impact are unlawful. Sometimes they have to be put up with”. Further, this case concerned what the EAT characterised as the loss of a chance to take advantage of a benefit “which could be described as a windfall”.