Age Discrimination and Redundancy

July 10, 2014

Age Discrimination and Redundancy

A 61-year-old local authority employee, who received a lower redundancy payment than younger workers with the same length of service because she was over the state pension age that applied at the time, has succeeded in her age discrimination claim (Heron v Sefton Metropolitan Borough Council).

Ms Heron was made redundant by Sefton Metropolitan Borough Council (Sefton) in September 2011. She had previously worked for the Learning and Skills Council, where her terms and conditions of employment included the Civil Service Compensation Scheme (CSCS), and transferred to Sefton on the same conditions. By the time she was made redundant, she had 10.5095 years of reckonable service under the CSCS.

Younger colleagues who had worked for Sefton for the same amount of time received a redundancy payment based on the number of years' reckonable service and negotiated an agreement whereby they were not required to serve out their notice but were paid two months' pay in lieu of notice. Ms Heron, whose redundancy payment under the CSCS was fixed at just six months' pay because she was over the state pension age, was unwilling to enter into a compromise agreement on the same terms as her younger colleagues as this would have required her to abandon her claim that she had suffered unequal treatment by reason of her age.

Ms Heron took her claim to the Employment Tribunal (ET) and lost. The ET held that the difference in treatment was not unlawful by virtue of Paragraph 1(1) of Schedule 22 of the Equality Act 2010. The CSCS was a statutory scheme and was therefore an 'enactment' with which Sefton was required to comply.

The Employment Appeal Tribunal (EAT) allowed Ms Heron's appeal against that decision. It found that the CSCS provided for a difference in treatment between employees dismissed by reason of redundancy who were over and under 60 at the date of dismissal but did not 'require' that difference to be respected. In addition, for the exception in paragraph 1(1) of Schedule 22 of the Act to apply, the 'enactment' must have direct effect on the particular circumstances of the claimant which, on the facts of this case, it did not. The CSCS terms were incorporated into Ms Heron's contract of employment when this transferred to Sefton, from which time the terms became contractual not statutory. The ET had therefore erred in law and should have rejected Sefton's Schedule 22 argument that it was required by an enactment to discriminate between Ms Heron and the younger employees who were made redundant at the same time. Furthermore, even if it had had direct effect, the provision would have required to have been justified as being a proportionate means of achieving a legitimate aim. In this case, no legitimate aim had been indentified, let alone justified.

The EAT also noted that Sefton had not regarded itself as bound not to depart from the terms of the CSCS when it had agreed to grant two months' pay in lieu of notice in addition to redundancy pay when reaching a compromise agreement with those employees who were under age 60.