In the case of Lockwood v Department of Work and Pensions and another [2013] UKEAT0094/12/0402 the DWP operated a redundancy pay policy which was designed so that employees who were over the age of 35 when they were dismissed received an enhanced redundancy payment.

Miss Lockwood ("Claimant") was a 26 year old administrative officer with 8 years' service. She took voluntary redundancy and received a payment of just under £11,000. However, had she been 35 or over she would have received a much higher redundancy payment. The Claimant brought a claim for direct age discrimination.

The DWP argued that the policy was justified because it was intended to counter-act the disadvantage which over-35s suffered in the job market. The original tribunal agreed with the DWP that this was a legitimate aim for the policy and that the policy achieved that aim in a proportionate way, so the policy was objectively justified.

On appeal, the Claimant tried to argue that social policy objectives used to try to justify a particular policy must relate to the particular employer's business. However, the EAT disagreed. It held (a) that the tribunal had been entitled to rely on statistical evidence that demonstrated the comparative difficulties faced by older workers after their employment had terminated; and (b) that the policy was a proportionate means of achieving a legitimate aim. The EAT agreed that social policy objectives could constitute legitimate aims, even if they had nothing in particular to do with the employer's business.

Key take-aways from this decision:

  • Before creating enhanced redundancy pay schemes you should think carefully about how redundancy payments are going to be calculated and a clear rationale should be identified to justify enhanced payments which differ from the shape of the statutory redundancy pay regime; and
  • Remember that any policy which pays older employees more (and which doesn't follow the shape of the statutory redundancy pay regime) needs to be capable of being objectively justified; a wider social policy of counter-acting the disadvantage to older workers in the job market is capable of objective justification.

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