The claimant is employed as a probation officer by an executive agency of the defendant.  The challenge was in relation to the agency’s pay progression policy, where there had been a limitation imposed post-economic downturn in 2010.  The previous policy allowed probation officers to progress three pay points per year, yet the new policy only allowed one pay point progression per year. The argument raised by the claimant was that it would take younger employees significantly longer to get to the top of the pay band compared to the older employees who had already been able to avail of the older policy thus giving them greater pay and pension benefits.

The Employment Tribunal and EAT held that the progression policy was prima facie discriminatory but that it had been justified by the respondent.  This was on the basis that the agency had limited pay progression as a temporary measure to cap pay but also to ensure that it was able to live within its means. The claimant appealed this decision to the Court of Appeal citing that cost alone cannot justify indirect age discrimination and it should only be a factor which could be relied upon in conjunction with another factor.  The claimant stated that the point of living within its means should not be separate to cost and that any future intention to change the system should be regarded as irrelevant.

The Court of Appeal dismissed the appeal.  On the issue of ‘cost plus’ it was held that the distinction involved may sometimes be subtle, but it will be real.  To this end, an employer cannot justify a discriminatory payment to one individual merely because it would save on costs. However, there needs to be a fair characterisation of the employer’s aim in the round and determine whether it was legitimate.  For this reason, the cost-plus label should be avoided as it could lead to a ‘mechanistic’ approach to a legitimate aim in indirect discrimination claims.

On the point of absence of means, the Court of Appeal held that bringing in a measure to ‘balance the books’ could constitute a legitimate aim.  In the index case, it was clearly on foot of real financial pressures and that goes to demonstrating that it was a proportionate response. On the point of future intention to change the system, it was held that a temporary measure may be easier justified where a permanent change may not be justified.   Accordingly, the claimant’s appeal was dismissed.

Practical Lessons 

When examining the effects of Covid-19 on employers, one fallout will be the need to save on costs.  This, in some way, aligns with the situation faced by the economic crisis in the late 00’s.  This decision demonstrates that the issue of cost can constitute a legitimate aim but that to do so the court must examine the aim of the employer in the round but that using ‘cost-plus’ may not be the best way in determining if the respondent has a legitimate aim.  As a result, there may be wider scope for employers to legitimise a provision or practice that is prima facie discriminatory, especially when it comes to age.
https://www.bailii.org/ew/cases/EWCA/Civ/2020/1487.html