An employment tribunal rules that an enhanced redundancy scheme which gave greater credit for service over 40 was unlawful as the employer could not identify a legitimate aim for the less favourable treatment of the younger employees. In calculating compensation, the tribunal based this on the difference between the payments made to the claimants and the amounts they would have received if an age-neutral scheme had been used.

Facts

National Starch & Chemical Limited, an ICI group company, had an enhanced redundancy policy which provided for three weeks’ pay per year of service up to age 40 and four weeks’ pay per year of service over 40.

The claimants were made redundant upon the closure of a site at the end of 2006. Mr Galt and others claimed that the calculation method was unlawfully discriminatory.

It was accepted that the scheme treated the claimants less favourably on age grounds and the question for the employment tribunal was whether or not the scheme was objectively justified.

In order to do so the company needed to show that the discriminatory effect of the scheme represented a proportionate means of achieving a legitimate aim. The company argued that its aim was to avoid unrest and bring about an orderly and satisfactory closure of the site. The majority of the tribunal accepted that this was capable of representing a legitimate aim. They also argued that favouring older workers was legitimate as older workers found it harder to find new employment.

Decision

Unlike in the MacCulloch case (click here) the tribunal was not prepared to accept, without any evidence, the assertion that older workers did find it more difficult to find new work.

In any event, the tribunal did not accept either of these aims had ever been considered by the company and thus the less favourable treatment of the claimants could not be justified.

At the remedies hearing the tribunal decided that the appropriate method of calculating compensation was to consider what kind of scheme would have been introduced had the company implemented a scheme which was non-discriminatory. They concluded that a scheme based on three and a half weeks’ pay per year of service would have replaced the current scheme and based compensation on this. This, it is contended, is not the correct approach.

A link to the judgment can be found here. 

Galt & others -v- National Starch & Chemical Limited - Liverpool employment tribunal 2101804/07