18 March 2013

Enhanced redundancy offers for older employees endorsed

Enhanced redundancy offers for older employees endorsed

The redundancy selection and dismissal procedure is never simple or straight forward for any business, but redundancy pay on the other hand is simple enough for those businesses who only offer the statutory package. However, where a business has a policy which offers older employees an enhanced voluntary redundancy package, would this contravene the Equality Act 2010 and amount to discrimination against their younger workforce?

This issue was recently dealt with by the Employment Appeals Tribunal (EAT) in Lockwood v Department of Work and Pensions (DWP).

 Background

The claimant, Ms Lockwood, applied for redundancy at the age of 26, having worked for the DWP for eight years. The redundancy package she was entitled to under the Civil Service Compensation Scheme worked out at nearly £11,000. However had she been over 35 the package on offer would have been in excess of £28,000.

Clearly this was disconcerting to Ms Lockwood and so she lodged a claim against the DWP for direct age discrimination.

The decision Ms Lockward's claim was dismissed at both the Employment Tribunal and EAT.

The reasoning given by the tribunals for the dismissal of the claim was that the two age groups were not truly comparable and that there were material differences between the effects of redundancy on a younger employee against those on an older one. The most important difference was cited as being the "comparative difficulty of loss of employment suffered by the older workers" in finding another job and juggling family and financial commitments.

Conclusion

In practice, it may now be possible for employers to offer enhanced packages to older employees as incentive for taking voluntary redundancy without fear of younger employees succeeding in a claim for age discrimination.

The EAT did however warn that the comparisons in each case must be assessed on the specific facts, though the Lockwood case does appear to cover the issue quite comprehensively and clearly, and so should serve as sound guidance for any employer seeking to offer enhanced voluntary redundancies for older employees.