Braithwaite and others v HCL Insurance BPO Services Ltd UKEAT/0152/14;Edie and others v HCL Insurance BPO Services Ltd UKEAT/0153/14

Why care

In this case the EAT had to consider whether a requirement for employees to sign up to new terms and conditions was indirect age discrimination. 

The case

Mrs Braithwaite and others (the claimants) became employees of HCL Insurance BPO Services Limited (HCL) following a TUPE transfer resulting in differences between the terms and conditions of employment of the claimants and HCL's existing employees. HCL subsequently suffered financial losses and sought to address the issue by harmonising all employees' terms and conditions to reduce its staffing costs, which had reached 115% of revenue. HCL proposed to remove the claimants' right to a number of contractual benefits (including private health insurance, carers' leave and, potentially, enhanced redundancy payments), increase their working hours and reduce their annual leave entitlement. The changes put the claimants at a particular disadvantage. As employees within the 38 to 64 year age range, they had built up greater entitlements due to longer service. During negotiations, the claimants proposed alternative solutions, including phasing in or reducing the changes, securing extra funding from HCL's parent company and seeking voluntary redundancies. HCL rejected the proposed alternatives and required all employees to sign up to the new terms and conditions or be dismissed. Some employees did agree to the new terms and conditions and were re-engaged on those terms. The claimants refused and were dismissed.

They brought claims for, amongst other things, age discrimination on the grounds that the requirement to sign up to new terms and conditions was a provision, criterion or practice (PCP) that was indirectly discriminatory on the grounds of age within the meaning of the Equality Act 2010.

The tribunal held that HCL had applied a PCP to the claimants and other employees but it was not indirectly discriminatory because it could be objectively justified as a proportionate means of achieving HCL's legitimate aim of reducing staffing costs to ensure its future viability and putting in place market-competitive, non-discriminatory terms and conditions of employment.

Both sides appealed to the EAT; HCL on the basis that there was no PCP and the claimants on the ground that the PCP was not objectively justified. The EAT rejected both appeals. It held that the requirement to sign up to new terms and conditions was a PCP. The older claimants and those employees that shared their protected characteristic did suffer a greater disadvantage than other employees. They stood to lose certain benefits, suffer longer working hours and receive less annual leave. That was a tangible disadvantage compared with those employees whose existing terms were no more advantageous than the new terms to which they were required to sign up.  However the PCP was not indirectly discriminatory because it was objectively justified. It was a proportionate means of achieving HCL's legitimate aim to "reduce staff costs to ensure its future viability and to have in place market-competitive, non-discriminatory terms and conditions" was a legitimate one.

The PCP was reasonably necessary because there were no less discriminatory means that achieved HCL's aim. The tribunal was entitled to conclude that the alternatives proposed by the appellants would not achieve HCL's aim and the tribunal had performed a balancing exercise. It assessed the effect of the changes upon the affected employees against HCL's needs.

What to take away

As a change in terms and conditions of employment can be a PCP employers should consider whether such changes may have discriminatory effect. However they should also consider the reasons for those changes and whether they can be justified (which in this case was to ensure the ongoing viability of the business).