Pulham and others v London Borough of Barking and Dagenham EAT/0516/08

age discrimination | pay protection | justification

The Employment Appeal Tribunal (EAT) has held that, contrary to the position with sex discrimination, pay protection arrangements that are discriminatory on the ground of age are always potentially justifiable.

Mrs Pulham (the test claimant) and 15 other employees brought age discrimination claims against the London Borough of Barking and Dagenham concerning its arrangements for encouraging the retention of employees by rewarding long service. The scheme entitled employees to be paid increments if they had 25 years' service and had reached the age of 55. While Mrs Pulham satisfied the service criterion, she did not meet the age criterion. She would not become entitled to any increment until 1 April 2011. When the Employment Equality (Age) Regulations 2006 (SI 2006/1031) came into force on 1 October 2006, the council was in negotiations with trade unions on the future of the scheme. The issue was dealt with in the context of negotiations on the introduction of a single status agreement, which was treated as taking effect from 1 April 2007. Under the agreement, the increment was frozen for current members of the scheme from this date and it was closed to new entrants, including Mrs Pulham.

An employment tribunal found that the council's failure to pay Mrs Pulham under the scheme was because of her age. She was treated less favourably than an employee with the same length of service who was aged 55 or over. However, unlike other forms of discrimination, direct age discrimination can be justified if it is a proportionate means of achieving a legitimate aim. The tribunal decided that the council's decision could be justified. The council's legitimate aim was to modify the scheme to make it lawful under the Employment Equality (Age) Regulations 2006 and its means had been proportionate, given that the changes were made through negotiations for a single status agreement with trade unions and the council's only real alternative was to open the scheme to employees of all ages, the cost of which would have been prohibitive.

The EAT rejected an argument that the Court of Appeal decision in Redcar & Cleveland Borough Council v Bainbridge and Equality and Human Rights Commission and other appeals [2008] IRLR 776 CA meant that, where past discrimination has been recognised, pay protection arrangements continuing such discrimination cannot be justified. The decision in Bainbridge related to sex discrimination and there are clear policy reasons why an employer that has failed to correct unlawful discrimination for many years should not be given further time to do so. There is no reason why an employer faced with the introduction of the Employment Equality (Age) Regulations 2006 should be absolutely disentitled to incorporate an element of pay protection into the adjustments necessary to conform to the new law, notwithstanding that it will involve a degree of continuing discrimination.

In deciding whether or not the arrangements were justified, the employment tribunal had correctly asked itself whether or not it was proportionate for the council to have continuing pay protection arrangements based on age. However, the EAT went on to say that the tribunal had attached too much weight to the fact that the arrangements came out of negotiations with trade unions. While this is relevant evidence for the purposes of the proportionality test, it is not conclusive. The tribunal had not considered the impact on individuals who satisfied the scheme's service criterion and not the age criterion. In addition, its reliance on the fact that the council had exhausted its budget by settling equal pay claims arising from the single status agreement was questionable.

As the employment tribunal's reasoning on justification was flawed, the issue should be remitted to a fresh tribunal.

Case transcript of Pulham and others v London Borough of Barking and Dagenham (Microsoft Word format, 159K) (on the EAT website)

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