In Pulham v London Borough of Barking and Dagenham, the EAT has held that, unlike the position in relation to sex discrimination and equal pay, pay protection arrangements that discriminate on the basis of age are always potentially justifiable.
The Council had operated a length of service benefit scheme that rewarded employees who were aged 55 or over and also had 25 years' service. Due to concerns about potential age discrimination, the Council and unions agreed, as part of the Single Status negotiations, to close this scheme to new entrants. Employees already in receipt of pay increments under the scheme would have their pay frozen at the current rate.
The Claimant already had 25 years' service but would not have reached age 55 until several years after scheme closed. As she was not currently receiving any payment under the scheme, she could not claim any payment under it. She brought a tribunal claim alleging that she was the victim of unlawful age discrimination.
The EAT held that the decision of the Court of Appeal in Redcar and Cleveland Borough Council v Bainbridge (that pay protection arrangements that continue unequal pay arrangements for a substantial period could not be justified), did not apply to cases of age discrimination. The EAT held that, since the Council was amending its scheme in anticipation of the change in the law, and because all forms of age discrimination can always be justified, the Council could seek to justify the transitional pay protection arrangements.
The EAT went on to hold, however, that neither the fact that the change had been agreed with the unions nor that the employer had exhausted the funds that it had allocated to settling equal pay claims would automatically justify the discrimination. The case was remitted to a fresh tribunal to consider whether the pay protection was actually justified.
Impact on employers
- This decision confirms for all employers the fact that it is always possible to try to use the defence of justification in response to a claim of age discrimination relating to terms and conditions of employment such as pay or redundancy (see, for example, the decisions in Loxley v BAE Systems, MacCulloch v ICI and Woodcock v Cumbria Primary Care Trust below). It is, however, of particular interest to public sector employers already facing significant numbers of equal pay claims.
- However, justification does not exist automatically just because the employer's action is supported by trade unions or the majority of the workforce. It will still be necessary for the employer to show it was a proportionate means of achieving a legitimate aim. As this case and the cases referred to above demonstrate, an employer will usually be able to show a legitimate aim. The more difficult part is showing that the discriminatory action complained of amounted to a proportionate means of achieving that aim.