Age Discrimination- when is it justified?

1st August 2008 In the recent case of MacCulloch v Imperial Chemical Industries plc the Employment Appeals Tribunal has considered the scope of the “justification” defence applicable to claims of unlawful age discrimination. In this case the appeal succeeded based on the Employment Tribunal’s failure to properly consider the issue of proportionality, so the Employment Appeals Tribunal did not have to decide this case on the issue of “justification” itself. However, it gave some indication as to how Employment Tribunals should address the issue of “justification” in age discrimination claims. Therefore it provides a useful guide for anyone concerned, affected or interested in this subject.

The case concerned an individual that was made redundant. At the time she was 36 years old, and had been with the employer for 7 years. The employer’s redundancy policy provided for an enhanced redundancy payment based on age and length of service. In the case of the individual she was entitled under the policy to a payment of 55% of her gross annual salary. In contrast a colleague with 10 years service, who was 50 years old, would receive 175% of the gross annual salary under the same policy.

The Employment Appeals Tribunal noted that while it may be justified for the employer to operate a scheme which rewarded loyalty by linking payments to length of service, it was still necessary for an Employment Tribunal to examine whether the degree of difference in the resulting entitlements was actually necessary to achieve the objectives of the redundancy scheme. There should be an assessment of whether the measures were proportionate in achieving the legitimate aims of the redundancy scheme.

This case should prompt employers to take time to examine any redundancy payment scheme they may operate, to ensure that they do produce a fair measure of reward to employees of different ages. This principle can obviously apply equally to ensure fairness to both younger and older members of staff in a redundancy exercise. Clearly excessive or disproportionate weighting in such a scheme for older (or younger) staff may well be challenged following this case.

If you need any specific advice on the issues raised in this article then please contact us.