The government has announced the start of a consultation period to gather views in response to its stated intention to reduce the maximum payment for voluntary redundancy from 21 months’ to 15 months’ pay.
The move has already been condemned forcefully by the Public and Commercial Services Union, and no doubt will continue to attract negative responses from employee representatives.
I wanted in this piece to consider the potential discrimination claims which might arise from pursuing a policy such as this.
First, I should say that the coalition government’s austerity policies initiated in 2010 triggered a wave of discrimination claims in response. Particularly relevant was the decision to impose 20% budget cuts on police forces in England & Wales.
That measure directly resulted in claims for age discrimination brought by Deborah Harrod and fellow affected officers against a total of five different police forces in response to the decision by those forces to secure the necessary budget cut by the forced termination of police officer contracts. As a police officer can only be forcibly terminated after he or she has accrued at least 30 years’ service and, by doing so, a pension fund worth at least two thirds of his or her final salary that meant that only officers at or over the age of 48 could be asked to leave early.
It so happens that the tribunal’s decision in favour of the police officers was overturned at the EAT, but the decision was very finely balanced.
Turning to the latest announcement the first question to tackle is whether or not a severance payment can ever be classified as “pay” for equal pay purposes. Looking at the UK equality legislation, the answer is probably no, but public sector workers are of course entitled to look beyond the UK legislation to the foundation directive. There they can expect to find a more favourable answer.
The Court of Justice of the European Union regards any form of severance payment as deferred pay for the purposes of the Community principle of 'equal pay for equal work' as provided by Article 141 of the EU Treaty.
Add to that the accepted rule that a claimant can cite former employees as equal pay comparators and a potential problem begins to take shape.
Imagine as the claimant of the future a female director of a local authority. All things being as equal as the law requires she would have on the occasion of her voluntary redundancy the legitimate expectation that her severance pay would be no less generous than paid to a male director released in a previous round of redundancy. It is likely to be the case that there has been an increase in proportion of female employees in management positions in the public sector due to a gradual but effective penetration of the glass ceiling.
Viewed like this, any decision to reduce the maximum payment for voluntary redundancy from 21 months’ to 15 months’ pay might well be gendered, that is sex discriminatory. The employer might have a defence to the equal pay claim as the Government’s writ would leave it no choice but to cap the payment, but the Government itself might be sued for introducing an indirectly discriminatory measure which is not capable of objective justification.
Some forecasts suggest that as many as 80000 public sector workers might be made redundant in the coming years. A failure to eliminate any unintended discrimination could become quite expensive.