Pulham v London Borough of Barking & Dagenham – Employment Appeal Tribunal ("EAT")

Background

Under the Employment Equality (Age) Regulations 2006 ('the Age Regulations'), both direct and indirect age discrimination can be objectively justified. The test for objective justification is that the employer must establish that the discriminatory treatment or provision, criterion or practice, as the case may be, is a proportionate means of achieving a legitimate aim.

Facts

The employer in this case had a scheme in place to reward length of service. Under it, employees would become entitled to be paid increments if they (a) had 25 years of continuous service and (b) were aged 55 or over.

Prior to the Age Regulations coming into force on 1 October 2006, the employer set up a committee to examine how its practices needed to change in light of this legislation. It identified the scheme as potentially discriminatory.

Extensive discussions took place between the employer and various trade unions representing its workforce. The result of these discussions was that, with effect from 1 April 2007, the scheme was closed to new entrants and under a pay protection arrangement negotiated with the unions, employees who were already in the scheme would continue to receive payments under it at their current rate for the remainder of their employment. No increases would be awarded.

The claimant achieved 25 years' service in March 1999 although, due to her age, she would not be eligible for payments under the scheme until 1 April 2011.

She brought claims of direct and indirect age discrimination under the Age Regulations based on her exclusion from the scheme from 1 October 2006 (the date the Age Regulations came into force) to 30 March 2007 (the "First Period"), and her exclusion from the pay protection arrangements from 1 April 2007 onwards (the "Second Period").

The Tribunal rejected her claims. Ms Pulham appealed to the EAT.

The EAT's decision

With regard to the First Period, the EAT held that Ms Pulham had suffered discrimination on grounds of her age. It remitted the case to a fresh Tribunal for the issue of justification to be determined.

In relation to the Second Period, the EAT addressed two fundamental questions. Whether the pay protection arrangements were capable of justification and if so, were they in fact justified?

Dealing with the first issue, the EAT saw no reason why an employer faced with the coming into force of the Age Regulations could not incorporate an element of pay protection into its adjustments to conform to the new law, even though such arrangements would involve a degree of continuing discrimination. Since all kinds of age discrimination can, in principle, be justified, it was open to the employer to seek to justify the pay protection arrangements.

In considering whether the arrangements were in fact justified, the EAT were concerned that the Tribunal had placed too much weight on the fact that the pay arrangements had been negotiated with the trade unions. Whilst a Tribunal is entitled to have regard, in assessing the justifiability of a discriminatory measure, to the fact that it has been negotiated with the workforce's representatives, this could not be conclusive evidence that the proportionality test was satisfied.

Secondly, the Tribunal placed reliance on the fact that the £5.5m reserve that the Council had set aside to deal with equal pay claims had been used up, and that there was a finite amount of money to share out. The EAT held, however, that employers cannot automatically justify a failure to eliminate discrimination by allocating reference to a particular budget, and then declaring that budget to be exhausted. This can however be a relevant factor when dealing with the issue of justification, though it cannot be decisive.

What does this mean for you?

This case provides a useful insight into some of the issues that arise when an employer seeks to objectively justify potential age discrimination. In particular, employers should note that, whilst workforce or union support for an arrangement may be a relevant factor when assessing justification, it is not an automatic route to justification.

The EAT recognised that the task of the Tribunal in attempting to weigh the discriminatory impact of a particular measure against the cost of eliminating that impact, is not an easy one. It warned, however, that employers should ensure that Tribunals are given sufficient information, both about the discriminatory impact of a measure on employees and about the alleged costs of removing that impact, and the financial background against which the affordability of those costs falls to be judged, to allow the Tribunal to make a fair decision.