Age discrimination: “cheapest employee” criterion was lawful

In HM Land Registry v Benson [EAT/0197/11], HM Land Registry (HMLR) asked its employees to apply for voluntary redundancy (VR) or early retirement (ER). The VR/ER scheme had a budget of £12 m. HMLR selected the “cheapest employees” (subject to the retention of necessary skills and a proper balance between staff grades) - in order to maximise the number of staff reductions. The “cheapest employees” were the employees who would receive the lowest amounts of redundancy pay.

Five employees who were aged over 50 years unsuccessfully applied for ER. HMLR considered them to be “expensive employees” because they would have received an immediate unreduced pension. The employees claimed that the use of the “cheapest employee” criterion was unlawful indirect age discrimination. The tribunal upheld their claim.

However, the EAT disagreed. The “cheapest employee” criterion was a proportionate means of reducing HMLR’s staff within the budget of £12 m. Therefore, the discrimination was lawful because it had been justified by HMLR. The tribunal had found that HMLR did not have any other alternative to using the "cheapest employee" criterion.

HMLR was not required to show that it had to reduce its staff within a budget of £12 m – because it had no more money - in order to justify the discrimination. However, the EAT warned that whether a “cheapest employee” criterion (or a similar criterion) could be justified will depend on the facts and circumstances of each case.

Indirect sex discrimination

The EAT found that HMLR’s failure to notify a female employee on a career break - that she would have to return to work in order to apply for VR – was unlawful indirect sex discrimination.

Comment

In Woodcock v Cumbria Primary Care Trust, the EAT expressed doubt as to whether para. 72 of Cross v British Airways correctly stated that discrimination could not be justified “solely on considerations of cost”.