The Employment Appeal Tribunal (EAT) has held that, in the case of HM Land Registry v Benson, an employer’s rejection of applications for early retirement from employees aged between 50-54, based upon cost, was objectively justified, and thus not unlawful age discrimination.
HM Land Registry was given a limited budget by the Treasury to fund a voluntary severance scheme, to address over-staffing and to cut operational costs over the longer term. Employees aged over 50 could apply for early retirement, and those aged under 50 could volunteer for early severance, under the Civil Service Compensation Scheme. HM Land Registry made it clear that its budget was limited and that all applications would not be automatically accepted.
Accepting all applications would have resulted in them exceeding their budget. Therefore, subject to ensuring each office was adequately staffed, they accepted the applications that cost the least. The applications for early retirement made by Benson and four colleagues for early retirement were not accepted, as the cost of providing their benefits was higher than that of employees in other age groups. They all brought claims for indirect age discrimination.
In overturning the decision of the tribunal, the EAT held that whilst the employer’s policy was indirectly discriminatory against employees of a certain age group, this was objectively justified. The policy of selecting the cheapest applications was to achieve the aims of reducing headcount, in order that they could operate within budget each year, and achieving this reduction within the budget given to them for this purpose. This inevitably required selection between the applicants. The tribunal itself had found that, after considering adequate staffing, cost was the only means of selection, and on that basis the EAT held that their method of selection was proportionate, and therefore justified.
Impact for employers
- The EAT was clear that this decision doesn’t necessarily mean that a similarly discriminatory practice will be justified in other cases. The fact that there was no real alternative to selecting the cheapest applications was central to the outcome here. However, if there are other less discriminatory alternatives, a particular course of action is unlikely to be justified.
- It was likely relevant in this case that the impact of the discrimination on the Claimants was not as significant as it might have been, as none of them were being dismissed as a result. This is likely to have been a relevant factor in considering the proportionality of the employer’s practice.
- There is much debate surrounding whether or not discrimination can ever be justified on costs alone, and this question is currently subject to an appeal to the Court of Appeal in another case. The EAT did not consider that Benson was a “costs alone” case, as considerations of adequate staffing in the relevant offices had also contributed towards the selection process. However, given that the tribunal had found that the only feature of the process that had a discriminatory effect was the decision to select based upon cost, it is arguable that the EAT should have considered whether this was in fact a “costs alone” case, and whether discrimination, in this context, could be justified.