Many employers have redundancy schemes based on length of service and age and, since the Employment Equality (Age) Regulations 2006, commentators have expressed concern at the vulnerability of these to claims of age discrimination. Under the regulations different treatment can be justified if it is a proportionate method of achieving a legitimate aim.
The EAT has given guidance on how the defence of justification might be used to support these policies, highlighting the need to ensure that the difference in treatment is proportionate.
The claimant was made redundant at the age of 36, having completed seven years of service which, under the employer’s redundancy policy, resulted in a payment of 55% of her gross annual salary. By contrast a 50 year old colleague with 10 years’ service was entitled to 175% of his or her gross salary.
The tribunal found that there was discrimination but that this was justified; the employer’s aim of rewarding and encouraging loyalty, and protecting older employees being legitimate. In addition, the popularity of the scheme meant that compulsory redundancies were avoided; the scheme was a proportionate means of achieving a legitimate aim.
The EAT found that, despite the tribunal identifying that the scheme had some legitimate aims, it had not properly considered whether the methods adopted to achieve those aims were proportionate. Whilst generosity and popularity were important in achieving the aims of the scheme, the tribunal did not deal with the need to balance these aims with the discriminatory effect on the claimant.
MacCulloch v Imperial Chemical Industries plc