Is refusal to allow an employee over 50 to take voluntary redundancy discrimination?

The Employment Appeal Tribunal have recently dealt with a case about direct age discrimination and in particular analysing the question of comparators.

The Law

Age discrimination is covered by the Equality Act 2010 which states that (with regards to age discrimination);

A discriminates against B if A treats B less favourably than A treats or would treat a comparator because of a protected characteristic (i.e. age) and the treatment is not a proportionate means of achieving a legitimate aim.

In order for an employee to successfully claim direct age discrimination they will need to show that there is a real or hypothetical comparator who they have been less favourably treated in comparison to. The comparator’s circumstances must be not materially different to the circumstances of the employee making the claim.

The Facts

In this case Mr Donkor who was employed as a Regional Director for the Royal Bank of Scotland (RBS), made a claim for discrimination as a result of RBS’ failure to consider him for voluntary redundancy.

In 2012 RBS started a preliminary restructuring of its staff and began by selecting staff who would be interviewed for a new role under the new structure and who would be given the option to apply for voluntary redundancy. Those employees over 50 who were not given an interview could also elect to take early retirement.

Four Regional Directors were not selected for interview including Mr Donkor. Two of these Regional Directors were under 50 and applied for and were given voluntary redundancy. Two of the Directors, including Mr Donkor, were over 50 and were not given voluntary redundancy due to the high costs involved. Mr Donkor’s voluntary redundancy payment would have been in excess of £500,000.

As an alternative RBS offered Mr Donkor and his colleague the chance to apply for an alternative role, and informed them that they could not apply for voluntary redundancy while a new role was available.

Mr Donkor subsequently started in the new role and in 2013 there was a further restructuring, but this time his application for voluntary redundancy was accepted. However, due to a change in the pension scheme rules only those over 55 could receive early retirement, which meant that Mr Donkor could not have the benefit of early retirement as well.

Mr Donkor claimed that RBS refusal to allow him to take voluntary redundancy in 2012 (which would have enabled him to also take early retirement) was direct age discrimination as his colleagues aged under 50 had been allowed to do so.

At the Employment Tribunal stage Mr Donkor’s claim failed as the Tribunal decided that his two colleagues were not appropriate comparators. They were not appropriate because they were not entitled to early retirement benefits. As a result Mr Donkor appealed.

The Decision

At the Appeal the Judge disagreed with the Employment Tribunal decision on the question of comparators on the basis that the difference in circumstances between Mr Donkor and his two colleagues under 50 was related to their age only. The fact that Mr Donkor was eligible for early retirement and his colleagues were not was because of age alone, and this could therefore not be said to be a material difference for the purpose of establishing comparators.

The Appeal Judge also considered the question of whether the refusal to allow Mr Donkor to take voluntary redundancy was less favourable treatment and it was conceded by RBS that this could amount to a detriment and less favourable treatment.

In their defence at the Employment Tribunal and Appeal RBS advanced that the reason for the less favourable treatment of Mr Donkor was cost, legal risk and the need to obtain higher authority for his redundancy payment, and not Mr Donkor’s age. The Appeal Judge rejected this argument and stated that these were merely matters arising from Mr Donkor’s age.

As a result of this outcome the Employment Appeal Tribunal concluded that there was a clear case of direct age discrimination.

The case was referred back to the Employment Tribunal to consider the question of whether the treatment was a proportionate means of achieving a legitimate aim.

Points to note

This case is a useful summary of the law on comparators in discrimination cases. Essentially the focus of the case at the Employment Tribunal had been the differences between Mr Donkor and his colleagues, which were, when analysed because of age, and therefore could not be said to be materially different.

RBS had applied a criteria to the way that they dealt with 4 employees undertaking the same roles which was purely based on age and which placed Mr Donkor at a disadvantage. The only remaining question is whether their actions can be justified.

What action do you need to take?

1. Check your redundancy policies and procedures to ensure that you do not have any discriminatory practices.
2. Seek advice about the specific circumstances if you find yourself undertaking a restructure or redundancy.
3. Contact me for a free initial discussion – 01983 89700, 023 8098 2006 or email alison@realemeploymentlawadvice.co.uk

Case Name

Donkor v Royal Bank of Scotland – Employment Appeal Tribunal