The Court of Appeal confirmed that financial constraints which obliged the probation service to reduce costs could be used to justify indirect age discrimination.
Facts
Mr Heskett was a probation officer. The issues in the case arose from the government’s austerity measures following the financial crisis in 2008, including the imposition of pay restraints across the public sector. As a result, the rate at which probation officers progressed up their pay scales was slowed down from three pay points each year to just one pay point per year. In Mr Heskett’s case, this meant that it would take 23 years to progress from the bottom to the top of the pay scale, instead of the seven or eight years it would have taken previously. He argued that this was indirect age discrimination.
The Employment Tribunal (ET) agreed that the policy had a disproportionate effect on younger employees, compared to older employees who were more likely to have reached the top of the pay scale already, so it was potentially indirect age discrimination. The key question was whether the policy could be justified as a proportionate means of achieving a legitimate aim.
Mr Heskett argued that this was all about cost, and avoiding costs could never be a legitimate aim justifying indirect discrimination. Costs and budget considerations could only be legitimate aims when combined with other factors. Rejecting the claim, the ET ruled that this was not a just a matter of costs alone and it was legitimate for the employer to seek to live within its means. The Employment Appeal Tribunal upheld the ET’s decision and the claimant appealed to the Court of Appeal (CA).
Decision
The Court of Appeal ruled that the ET was right to find that the pay policy was justified in the circumstances of this case.
The Court confirmed that it is not legitimate to discriminate purely out of a desire to save or avoid costs. For example, an employee who decides to pay part-timers less per hour than full-timers simply because it is cheaper could not justify that. The “costs-plus” rule (which requires something in addition to pure cost to justify indirect discrimination) is correct. But it is important to look at the whole story.
The employer in this case was subject to financial constraints which obliged it to reduce costs. This was different from costs alone. An employer’s need to reduce its expenditure to balance its books can be a legitimate aim. There was no good basis for ignoring the constraints under which an employer is in fact having to operate. This meant that, although the pay policy did disproportionately affect younger employees, it was justified in all the circumstances.
The judgment is available here
Mr C Heskett v Secretary of State for Justice, [2020] EWCA Civ 1487, 11 November 2020