To successfully claim age discrimination, workers have to show that their employer has applied a provision, criterion or practice (PCP) which applies to everyone but puts workers of a particular age group at a disadvantage and the employer cannot justify it. In Braithwaite and ors v HCL Insurance, the Employment Appeal Tribunal (EAT) held that it is not age discrimination to impose new contracts on employees if the aim is to ensure the future viability of the company.
A number of employees, who had been employed by a company called Liberata UK Ltd, transferred over to HCL Insurance under the Transfer of Undertakings (Protection of Employment) Regulations 2006.
When the company started to encounter financial difficulties, it decided to impose a single set of terms for all employees that would not provide entitlement to certain benefits. This included private health insurance, carer days and enhanced redundancy payments, as well as changes to working hours and annual leave. Older workers were put at a particular disadvantage by these changes as they had built up greater entitlements by virtue of having longer service.
They were dismissed when they refused to agree to the new terms and conditions and claimed age discrimination, among other things.
Section 19 of the Equality Act 2010 states it is discriminatory for an employer to apply a PCP against a worker of a particular age group which puts them at a particular disadvantage compared to someone else without that characteristic, and the employer cannot show that it is a proportionate means of achieving a legitimate aim.
The tribunal held that, by imposing the new contract, HCL Insurance had applied a PCP.
However, it also held that the introduction of the new terms was a proportionate means of achieving the legitimate aim of reducing staff costs to ensure the company’s future viability and to have in place market-competitive, non-discriminatory terms and conditions.
The employer appealed against the PCP finding, arguing that the new terms applied to all employees and therefore could not put any particular employee at a particular disadvantage, as decided in the case of ABN Amro Management Ltd v Royal Bank of Scotland. The employees appealed on the issue of justification.
The EAT distinguished ABN Amro on the basis that the discretionary bonus scheme in that case applied equally to all employees up until a certain date. There was no time at which some employees were treated differently from others. By contrast, the PCP in this case put certain employees at a disadvantage because they had existing contractual rights which were different from those enjoyed by other employees who would not be at a particular disadvantage by being required to agree new terms and conditions.
It also dismissed the employees’ appeal against justification, finding that the tribunal had correctly evaluated whether the PCP was objectively justified and had properly identified the company’s legitimate aim. The tribunal was aware of the effects of the PCP on the employees and balanced the company’s needs against the effect of the changes on them. It was aware of the alternatives they had proposed but was entitled to conclude that they would not enable the company to achieve its legitimate aim.