Loxley v BAE Systems Land Systems (Munitions & Ordnance) Ltd EAT/0156/08

direct age discrimination | redundancy scheme | justification

The Employment Appeal Tribunal (EAT) has held that an employment tribunal did not correctly assess whether or not a redundancy scheme that excluded older workers could be justified.

Unlike other forms of discrimination, direct discrimination under the Employment Equality (Age) Regulations 2006, regulation 3 can be justified.

BAE's redundancy scheme excluded employees aged 60 or over. It also reduced the amount of redundancy pay for every month of service for employees aged 57 to 59. The employer accepted that the scheme discriminated against older workers. However, an employment tribunal held that the scheme was justified on the grounds that the company's pension scheme had entitled employees to a pension at 60. Employees made redundant so close to retirement would have been presented with a windfall.

The EAT accepted that preventing a windfall can be a legitimate aim of a redundancy scheme. One of the aims of a redundancy scheme of this type is to cushion employees from the effects of losing their income. The EAT had no doubt that the fact that an employee is entitled to immediate pension benefits will always be a highly relevant factor for an employer determining what redundancy rights, if any, the employee ought to receive.

However, the EAT went on to hold that the tribunal had not carried out an exercise to consider whether or not it was proportionate to exclude an older employee from any redundancy payment altogether because of his or her entitlement to a pension. The case should therefore be remitted to a fresh tribunal to consider this issue.

Case transcript of Loxley v BAE Systems Land Systems (Munitions & Ordnance) Ltd (Microsoft Word format, 77K) (on the EAT website)

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