The Court of Appeal has confirmed the DWP was justified in weighting its severance pay in favour of older workers. Or, to put it more exactly, the employment tribunal had been entitled to uphold the DWP’s arguments that the rules of the Civil Service Compensation Scheme did not infringe age discrimination law by providing significantly higher payments to workers over the age of 35.

The argument was about the CSCS rules on voluntary redundancy payments which have since been changed. When the claimant (Ms Lockwood) was dismissed in 2007, at the age of 26, she was entitled to a payment of just under £11,000 after nearly eight years’ service. Had she been a 35 year old with the same length of service, she would have received over £17,000 more. The question was not whether that was fair, but whether it was a “proportionate means of achieving a legitimate aim”. If the DWP had failed to make good this defence, it would have been liable for direct discrimination on grounds of age and a large number of other similar claims would have followed.

At the tribunal the DWP said that the aim of the voluntary severance scheme, which dated back to the early 70s, was designed to be “most generous to those whose need was greatest”. Older workers tended to bear a greater “weight of family responsibilities” and faced greater difficulties in finding another job. This was backed up by recent statistical evidence which showed that workers over 35 were more likely to have significant family and financial responsibilities and faced greater difficulties in finding new employment.

The Court of Appeal concluded that the tribunal had been entitled to rely on this evidence when deciding that the aim behind the scheme was legitimate and the measures taken were appropriate and necessary. That was despite the fact that Ms Lockwood’s personal circumstances were in fact closer to those of a typical person in the over 35 age group: it was just not practical to look at each employee’s individual circumstances.

Given the limited scope of arguments available on appeal, the Court of Appeal did not have to express its own view on the justification issue, other than to state that the conclusion was one the tribunal was entitled to reach. But it is easy to see that the decision could have gone the other way. The age gradient was much steeper than in the statutory scheme and the choice of 35 as the trigger for significantly more generous payments does seem a little surprising in today’s environment.

This case is therefore likely to be something of a one-off. However, given that almost all contractual redundancy schemes have some age weighting, it will provide some reassurance for employers whose schemes provide a gentler age differential. 

It is worth adding that even arrangements which go no further than mirroring the statutory scheme are not necessarily immune from challenge. There is an express exemption for such schemes in Equality Act, which effectively treats such arrangements as automatically justified. However, a challenge in the employment tribunal invoking the Equal Treatment Directive is still theoretically possible, since the European Court of Justice has not yet been asked to look at the age-related weighting in the UK’s statutory redundancy scheme, or anything similar.