Can 'cheapness' be a selection criterion for redundancy?

The answer may well be yes as the recent EAT’s recent decision in HM Land Registry Appellant –v- Mrs S M Benson and Other Respondents UKEAT/0197/11/RN (handed down on 10 February 2012) in respect to age discrimination.

The HM Land Registry had a budget of £12 million to reduce their headcount so they offered employees a voluntary redundancy/early retirement scheme, with enhanced benefits. One of the selection criterion used was, what the tribunals referred to as ‘cheapness’ i.e. selecting employees whose entitlements under the scheme would be the lowest, to allow them to make redundant as many people as possible within the budget identified. This meant that a certain category of people were not selected for redundancy – these consisted primarily of the 50+.

Unusually (in my experience anyway) the claim was brought by 6 employees (the Claimants) who were not selected for redundancy, 5 of them complained of indirect age discrimination and one of them complained about sex discrimination.

So you all understand indirect discrimination the legal definition is where the employer applies a Provision, Criterion or Practice (PCP) which is neutral on the face of it, but disadvantages people with a protected characteristic (age,disability, gender reassignment, marriage & civil partnership, pregnancy & maternity, race, religion or belief, sex and sexual orientation), unless the employer can justify the PCP as a proportionate means to achieving a legitimate aim.

Dealing with Indirect Age Discrimination
The tribunal, at first instance, held for the Claimants. However the EAT reversed the position primarily on the basis that had the criterion not been used then than the redundancy bill they would be footing would be 150% of the budget allocated by the HM Land Registry (the Respondent). Therefore the PCP was a proportionate means to achieving a legitimate aim.

Further they considered the fact that the Respondent needed to make a balanced judgement in respect to the experience of the work force. This makes sense to me - after all no employer can effectively function without the right level of experienced employees.

What employers must remember is that this is a case were the ‘cost’ of making employees redundant was only one of the criterions used for selection. The principle remains that costs alone may amount to indirect age discrimination however in the majority of the cases costs will only be one of the factors considered.

The reason why I personally think it is a strange case is that it was brought because employee’s were not selected for redundancy, I am fully aware that some of those in public office (notably police officers) bring actions to remain in office. This decision may have some effect on those actions; it will all depend on whether the tribunals believe whether the force used costs plus some other factor to retire those with 30 years’ service. The likely argument that the force will use is that due to budget constraints they needed to enforce retirement for officers with over 30 years’ service. However the tribunals make decisions on a case by case basis therefore officers/police federation representatives will need to be very careful how cases are presented.

For business owners with an allocated budget for the redundancies ensure that you do not select any employee using costs alone as the criterion and always ensure that you take legal advice before any decision of this nature is made.

Dealing with indirect sex discrimination

One of the Claimant’s in the above mentioned case mentioned complained of indirect sex discrimination, this was on the basis that she was not included in the selection process because she was on a career break straight after maternity and not due to return until 2013.

She was initially informed about the redundancy schemes however she was subsequently excluded because she would be returning after 31 March 2010 (a selection criterion which was decided by the Respondent at a later date and one which she was not notified of).

The EAT did not uphold the Respondents appeal in respect to the indirect sex discrimination PCP being a proportionate means to achieving a legitimate aim. They failed to inform the Claimant that she was excluded from the redundancy selection on the grounds that she did not return from her career break until 2013. This ultimately led to the Claimant being robbed of the opportunity to give the Respondent a notice to return to work prior to 31 March 2010.

So those of you with plans for redundancy plans should ensure that careful consideration is given to employees on maternity leave/career breaks straight after maternity leave.

Again as a lawyer having worked with a number of institutions (such as the police) this case may be the reverse of what the claimant may want to achieve – i.e. the officer may want to remain in service as opposed to be made redundant with enhanced pension benefits.

If you are going through a similar procedure and would like a 30 minute free telephone consultation please contact me on 07841011980 or info@scelegal.co.uk to book an appointment.