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Enhanced redundancy pay scheme not justified

Enhanced redundancy pay scheme not justified

In Galt & Others v National Starch & Chemical Limited, a Tribunal held that the employer had failed to justify its use of enhanced redundancy payments which had been calculated on the basis of age and length of service, but which did not mirror the statutory redundancy payment scheme. The scheme did not therefore fall within the exemption provided by Regulation 33 of Employment (Equality) Age Regulations 2006, and as a result, the employer had acted unlawfully.

Regulation 33 of the Employment (Equality) Age Regulations 2006 contains specific a exemption from unlawful age discrimination for enhanced redundancy payments where those payments are calculated in accordance with the statutory redundancy pay scheme and then enhanced using the permissible methods set out in Regulation 33(4)(b)&(c). Redundancy schemes which do not fall within the exemption may be discriminatory on the ground of age unless they can be objectively justified as a proportionate means of meeting a legitimate aim.

Under the enhanced redundancy payments scheme, employees received 3 weeks’ pay for each year of service when they were under 40 and 4 weeks’ pay for each year they were over 40. The group of ‘younger’ claimants alleged that they had been less favourably treated than colleagues who were ‘older’ when they had been made redundant.

NSCL conceded that the practice was indirectly discriminatory, but argued that it was justified as older workers would find it harder to find new work and it was a proportionate means of achieving a legitimate aim. The Tribunal rejected the justification argument on the basis that NSCL had not produced any persuasive evidence that older employees would find it harder to obtain work.

 

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