The Employment Appeal Tribunal has ruled that a redundancy scheme that gave more generous terms to older employees did not amount to age discrimination. Will Walsh from our Employment Team explains.

The case in question was Lockwood v Department of Work and Pensions. When the DWP went through a redundancy exercise in April 2007, Miss Lockwood took advantage of the voluntary redundancy scheme on offer. Her employment terminated in September 2007. Miss Lockwood was 26 years old at the time. Under the scheme, as a 26 year-old employee with 8 years' service, Miss Lockwood received a redundancy payment of £10,849.04. However, under the scheme rules, her severance payment was about 61% of that of a colleague aged over 35 with the same length of service.

Miss Lockwood brought a claim for direct age discrimination because of the difference in the levels of pay. Her claims were dismissed on two grounds.

Firstly, for a successful claim for direct discrimination, an employer must treat the person less favourably than a comparator. When determining a relevant comparator, it must be a like for like comparison, with the circumstances being the same other than the particular protected characteristic. There must be no material difference between the circumstances of the two people. In Miss Lockwood's case it was decided that it was not appropriate to compare those under the age of 35 with those over the age of 35, on the basis that there was in fact a material difference between the two; the DWP put forward statistical evidence showing that older workers suffered greater difficulties upon loss of employment. As the circumstances of each group were deemed to be different, a direct comparison between the two could not be made.

Secondly, it was decided that the less favourable treatment was justified. The aim of the DWP was to produce a proportionate financial cushion for workers until alternative employment was found. In view of the statistical analysis that older workers would take longer to find new employment, the scheme was designed to give them a greater cushion. The decision of the Employment Appeal Tribunal was that this was a proportionate means of achieving a legitimate aim, when balanced against the disparate treatment of younger workers.

What does this mean for employers?

The case shows how employers can make out a defence of justification. In this particular case there was no suggestion that the DWP stood to benefit from an enhanced redundancy payment for older workers and the provision of a financial buffer to those who might suffer more from loss of employment was clearly a legitimate aim of a strong public interest nature.

Employers should remember that the issue of justification in direct discrimination cases is only relevant when the protected characteristic is age. The defence of justification is not available for any other type of direct discrimination allegation, although it can be used to defend claims of indirect discrimination.

Employers should also note that, in this particular case, the DWP had put together its redundancy scheme on the back of clear statistical evidence showing the relative hardship to older workers; it had not simply made an assumption. That same statistical evidence was key evidence in defending the claim.

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