This case was originally heard by an employment tribunal and its decision delivered in December 2007. An appeal against the tribunal’s decision was heard by the Employment Appeal Tribunal in July 2008. The EAT decision is available here.
Facts and background
ICI’s redundancy pay was calculated by subjecting ‘qualifying pay’ to two multiples: the first multiple was based on length of service up to a maximum of ten years; the second was based on age.
This second, age-based multiplier increased with each month up to age 50 at which point the multiplier was 175% of the initial sum. From age 57 the multiplier declined until age 61 and four months at which point the multiplier was 50%.
Ms MacCulloch was made redundant at age 36 after 7 years and 8 months service. Her redundancy pay was calculated at 55% of annual salary.
She complained to a tribunal that this discriminated against her on grounds of age in two respects:
- directly, in that older employees (at least up to 57) with the same service would have been subjected to a higher multiple; and
- indirectly, in that increasing the multiple with service would disadvantage younger employees and in particular those within her younger age group.
In order to defend the direct discrimination claim (based on the age-related multiple), ICI needed to identify its legitimate aim and then show that use of the multiplier was a proportionate means of achieving that aim.
The company put forward three aims:
- to give financial protection to older workers who are more vulnerable in the job market;
- to encourage older workers to leave creating vacancies for younger workers;
- to honour a contractual promise to the employees.
The employment tribunal accepted the first two of these aims (but not the third) and was satisfied that the scheme was a proportionate means of achieving these aims.
The tribunal also accepted that the potentially indirectly discriminatory service-related criterion met a legitimate aim and was proportionate.
The EAT agreed that the first two aims for the higher multiple for older workers and the aims for the service-related element were legitimate but was not satisfied that the test of proportionality had been properly considered.
The case was remitted to the same tribunal to reconsider whether the potentially discriminatory aspects of the scheme were proportionate.
Perhaps unsurprisingly it came to the same decision as it had the first time that ICI’s scheme was proportionate and lawful.
A couple of interesting points come out of the tribunal’s decision:
Firstly, the tribunal gave significant weight to acceptability of the current scheme to the workforce as a whole and the potential industrial relations implications of change. This is a common thread from several of the early age discrimination claims. Whether it will stand the test of time remains to be seen. It seems inconceivable that similar weight would be given to the general acceptance of sex or race discriminatory measure.
Secondly, the Claimant sought to rely on statistics to rebut the view that redundant older workers find it more difficult to find work than younger ones. The tribunal was unimpressed with these which merely showed percentages in and out of the job market. The tribunal was more concerned with their own experience of the difficulty older workers have in finding work.
MacCulloch -v- Imperial Chemical Industries plc ET 2700083/2007 (remitted from EAT).
A further appeal was made to the EAT after this ET decision. This second appeal was on the issue of remedy. The judgment is available here.