An employer can take into account the fact that an employee is entitled to pension benefits when determining what redundancy rights to give him. Although direct age discrimination, excluding such employees from a contractual redundancy scheme may be justified. Tapering provisions may also be justified to ensure equity between those close to and those at retirement age.

Under an employer's contractual redundancy scheme employees aged over 60 received no payment as they were entitled to take a pension (albeit subject to a minor reduction for taking it before age 65). The employer's aim was to avoid these employees receiving a windfall of both pension and redundancy payment. This aim was found to be legitimate, but the tribunal had failed to assess whether the scheme was a proportionate means of achieving the aim. The tribunal had not determined the relative values of the pension benefits and the redundancy entitlement. The case was therefore remitted to the tribunal to reconsider. (Loxley v BAE Systems, EAT)