Employment and Equality experts, Jones Cassidy Jones, have agreed to write a quarterly report on equality law developments that will impact in Northern Ireland and beyond.

Today's article has been written by Joanne White and covers raised by the following:

1. Woodcock v Cumbria Primary Care Trust

2. HM Land Registry v Benson & Others

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Introduction

The issue of cost in the context of justifying discrimination remains a controversial one. In Cross v British Airways plc [2005] IRLR 423, the EAT in a case of indirect sex discrimination held that an employer cannot rely solely on considerations of cost but may be permitted to put cost into the balance together with other justifications, if there are any. This is often described as the “costs plus” approach in that whilst budgetary considerations cannot justify discrimination on their own they may do so in combination with other reasons.

Unlike other forms of discrimination, under the Employment Equality (Age) Regulations (NI) 2006 it is possible for employers to justify direct age discrimination claims as well as indirect age discrimination. In relation to indirect discrimination a discriminatory provision, criterion or practice is justified if the employer can show that it is a proportionate means of achieving a legitimate aim. It is important to remember that other types of direct discrimination, for example, on grounds of sex, religion, disability, cannot be justified.

In the recent case of Homer v Chief Constable of West Yorkshire Police [2012] UKSC 15 the Supreme Court stated that the range of aims which can justify indirect discrimination was wider than the aims which can justify direct age discrimination. In this case of indirect age discrimination the Court held that the requirement to have a law degree to get to the highest point on a legal adviser’s pay scale did cause “particular disadvantage” for those in the Claimant’s age group (60-65) and the matter was remitted to the Tribunal to reconsider justification. The Supreme Court highlighted that in cases of indirect discrimination, justification is not limited to social policy aims (under EU law) but can encompass a real need on the part of the employer's business.

By way of contrast, the more narrow remit of the justification test for direct age discrimination was stressed in the Supreme Court’s decision in Seldon v Clarkson Wright and Jakes [2012] IRLR 590 where a law firm was able to justify a retirement age of 65 for Partners on the basis of intergenerational fairness (a phrase used regularly by the Court of Justice of the European Union and which essentially means promoting fairness in recruitment/employment opportunities across the generations) and dignity (avoiding the use of performance management to dismiss older workers, which itself sounds like a stereotypical assumption!). However Lady Hale who gave the leading judgment in the case relied on EU law and stated that in cases of direct age discrimination the employer must have a legitimate objective of a public interest nature, which must be consistent with the social policy aims of the state such as those related to employment policy, the labour market or vocational training, and the means used must be proportionate.

Bearing the above in mind there have been two earlier relevant cases which focused on cost as a reason for justifying direct age discrimination (Woodcock) and indirect age discrimination (HM Land Registry) which have been widely reported and are examined in further detail below.

(a) Woodcock v Cumbria Primary Care Trust

In Woodcock v Cumbria Primary Care Trust [2012] EWCA Civ 330 CA, one of the main points in this case was whether cost could be a legitimate aim to justify the employer’s decision to make the Claimant redundant before he turned 50 in order to avoid him availing of early retirement on enhanced terms which would have cost the Trust £500,000-£1 million. This is in contrast to the redundancy package which he received of £200,000.

Ultimately the Court held that the Trust was justified in dismissing the Claimant, who had been at risk of redundancy for some time, before he reached 50 to avoid him getting a pension “windfall”. However the Court stressed the facts in this case were unusual and the decision should not be taken as a general rule that it will be lawful for an employer to time a reorganisation solely to prevent an employee from qualifying for enhanced pension rights.

The Court’s decision was influenced by the fact that the Claimant had been treated beneficially by the Trust in a number of respects including being kept on for a long period after being put at risk of redundancy to see if there was other work he could do and it had abided by the one year contractual notice period.

In relation to the “costs plus” approach (Cross v British Airways [2005] IRLR 423 EAT), the Court of Appeal did not provide any substantial guidance on whether or not cost alone can ever justify direct age discrimination. Previously the EAT in this case had suggested that there may be cases where cost alone could constitute sufficient justification although its comments on this are not binding. Indeed this should be viewed with extreme caution (in cases of direct age discrimination) in light of the Supreme Court’s decision in Seldon.

The Court of Appeal held that the Claimant’s treatment was not solely about saving costs. It said that the Claimant’s post was genuinely redundant. The issuing of the notice of dismissal and the timing of this therefore had two legitimate aims, the prevention of a windfall to the Claimant and terminating the Claimant’s employment on grounds of his genuine redundancy.

It could be argued that the Court of Appeal’s decision in Woodcock is now open to some doubt in light of the Supreme Court holding in Seldon that direct age discrimination may only be justified if it seeks to achieve a legitimate aim of a “public interest” nature, such as those related to employment policy, the labour market or vocational training. How such public interest aims apply to the specific business needs of the particular employer in its need to reduce costs or improve competitiveness remains to be seen. To justify direct age discrimination, it would seem that a “social theme” will need to be engaged.

Decisions of the Supreme Court are binding on NI Tribunals and Courts. Ultimately employers could still be vulnerable to a successful claim if they to dismiss an older employee where the decision would seem to be motivated solely by the need to save costs. Indeed relying on costs at all to justify direct age discrimination may well be open to further challenge by claimants in light of the Supreme Court’s dicta (based primarily on EU law, not domestic) in Seldon.

(b) HM Land Registry v Benson & Others

In this case the employer was entitled to consider costs in a voluntary redundancy selection.

Five Claimants alleged indirect age discrimination, all aged between 50-54. They are argued that being turned down for voluntary redundancy amounted to indirect age discrimination. The Land Registry was allocated £12 million towards the overall cost of voluntary severance arrangements. The cost of accommodating all those who applied including the Claimants would have far exceeded the £12 million budget. It therefore excluded a number of volunteers for redundancy whose circumstances were such that they would be particularly expensive to make redundant. This included the five Claimants who because they were over 50 and had sufficient length of service would have been offered compulsory early retirement qualifying them for extensive benefits under the Civil Service Compensation Scheme.

The primary criterion applied by the Land Registry was cheapness as the more staff that could be released the more costs would be saved and the less cramped would be the offices. However a “costs plus” approach was taken in that another justification put forward was the need to retain essential specialist expertise and a balance of the grades of staff. The Land Registry calculated the costs of releasing each applicant and then selected the cheapest applicants to release within its budget.

The Tribunal upheld the age discrimination claims. It held that no other satisfactory method of selection other than the cheapness criterion had been shown to be possible. However, it found that the Land Registry had not demonstrated a real need to limit its spending on the scheme to £12 million. It held that it had not done so because it had not shown that the payment of an additional £20 million was unaffordable! It had not shown that the funds were absolutely unavailable in the extent that they could not be paid without insolvency.

The EAT upheld the appeal. The main issue before the EAT was whether the cheapness criterion was justified as a proportionate means of achieving a legitimate aim. It held that there was no doubt that it was legitimate for the employer to improve its financial position by offering voluntary redundancy. It was also legitimate to impose a limit on the amount that could be spent on such redundancies even if that meant selecting between the applicants. The employer was entitled to make decisions about the allocation of its resources. There was no challenge to the Tribunal finding that if there was to be selection, the only practical criterion was cheapness. That made it hard to escape the conclusion that the use of that criterion was justifiable.

While the test of justification required there to be a real need for the provision, criterion or practice in issue, that did not equate to absolute necessity. The EAT noted that the impact of the discriminatory criteria was not as severe on the Claimants as in many cases. Those affected did not lose their jobs or lose any other benefits which they had a positive expectation of receiving. They had simply lost out on the chance to take advantage of the benefits which could be described as a windfall.

The EAT’s decision in HM Land Registry is not binding on NI Tribunals and Courts although its decisions can be persuasive. The need to save costs as a potential justification sits more comfortably in cases of indirect discrimination (provided there is evidence to support it – not mere assertion). However it is recommended that in such cases employers do not rely on costs alone as a potential justification but retain the “costs plus” approach set out in Cross.

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Legal-Island would like to thank Joanne White, Partner, Jones Cassidy Jones Solicitors, for the main content of this email.

Contact:

Email: JWhite@jcjsolicitors.co.uk
Telephone No: +44 (0)28 90642290: Fax No: +44 (0)28 90642297.
Address: 220 Ormeau Road, Belfast, BT7 2FY

RELATED EVENT

Explore these matters in detail with JCJ this autumn. Beverley Jones, Partner, Jones Cassidy Jones, discusses the following at the Legal-Island Equality Law Update 2012 on 4th October:

Age Discrimination Developments: 2012 has seen several major cases in the jurisdiction of age discrimination, including Seldon, Homer, Woodcock and Bailey.

* In what circumstances might compulsory contractual retirement be lawful?
* Is it safer to deal with employees on a case by case basis?
* Can costs alone justify age discrimination and what are legitimate ‘cost +’ arguments?
* How might employers best avoid indirect age discrimination complaints e.g. alternative criteria to qualifications?
* How do you carry out and analyse an age audit for justification purposes?
http://bit.ly/Ladyyr

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EQUALITY LAW UPDATE 2012

Join our speakers:

* Beverley Jones, Partner, Jones Cassidy Jones
* Adam Brett, Partner, Pinsent Masons
* Kiera Lee, Partner, Mills Selig
* Maxine Orr, Partner, Worthingtons
* Michael Wardlow, Chief Commissioner of the Equality Commission
* Barry Fitzpatrick, Equality Consultant

On 4th October for a course is designed with experienced employment law practitioners, HR professionals and other employment representatives in mind. Focus in detail on:

* Age Discrimination Developments
* Discrimination, Recruitment, and Agency Workers
* Faking It - What to do When you Suspect Discrimination Being Used to Shield Performance Failures
* Provision, Criterion or Practice Developments in Disability
* Harassed by Facebook and Other NI Cases
* ECNI vision, key aims and objectives for the future
* Trends from the year and likely developments in the employment equality field to expect in 2013 and beyond

This is our seventh annual equality review. Not to be missed, if you're serious about equality law in Northern Ireland:
http://bit.ly/Ladyyr

Legal-Island
26 June 2012

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