Length of service
Labour & European Law Review Weekly Issue 348 04 December 2013
Employers cannot treat a worker less favourably than someone else if the “relevant circumstances” are more or less the same (unless the employer can justify it). In Lockwood v Department of Work and Pensions (DWP), the Court of Appeal held that the DWP was justified in paying older workers more severance pay than younger workers because younger people could find jobs more easily and had fewer financial commitments.
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 and EAT decision
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 Ms Lockwood’s age group. On that basis, the tribunal concluded that there had been no less favourable treatment between Ms Lockwood and the comparator 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 as it was a proportionate means of achieving a legitimate aim which was to provide a financial cushion for older workers until they could find other work.
The EAT (weekly LELR 317) held that the tribunal was correct to find “material differences” between the two age groups; and that the DWP had adopted a proportionate means of achieving a legitimate aim.
Decision of Court of Appeal
The Court of Appeal held that the tribunal was wrong to find that there were “material differences” between Ms Lockwood’s age group and that of her comparators on the ground of age, with the result that no less favourable treatment could be identified. The factors relied on were linked to the “protected characteristic” of age and as such “did not make the relevant circumstances of her case materially different from that of the comparator”.
If it did, it would mean that tribunals could hold that the “relevant circumstances” were different in a race discrimination case because the comparator was white and the complainant was black, resulting in a finding of no less favourable treatment and no discrimination.
Having made the comparison, it was clear Ms Lockwood had been treated less favourably because she had received substantially less money than someone whose circumstances were identical to her, apart from age.
However, it was clear that the DWP needed to make people redundant and had a limited pot of money that it could offer its former employees. As a result, it had decided to adopt a banding approach which would result in disparate treatment between employees of different ages.
The tribunal had recognised this and had been entitled to find, based on its consideration of the evidence, that younger people could find jobs more easily and had fewer financial commitments, with the result that the scheme was neither disproportionate nor inappropriate.