A claim for direct age discrimination in relation to a ‘pension age cap’ policy in a voluntary redundancy payment succeeded.
Facts
Mrs Elliot’s employment ended on her ‘voluntary exit’ (VE) from the Parliamentary and Health Service Ombudsman (PHSO) at the age of 64. The PHSO sought volunteers under its VE scheme as part of a restructuring. The scheme offered employees the opportunity to take voluntary redundancy and receive a lump sum. Mrs Elliot’s intention at the time of the redundancy was to work for another two years full-time and two years part-time. She could not afford to retire.
As Mrs Elliot was entitled to receive her pension from the age of 60, the terms of the Civil Service Compensation Scheme (CSCS) capped her VE payment at 6 months’ pay. This amounted to £21,375.50. An employee aged under 58 years and 9 months leaving under the same scheme with the same length of service and salary would have received a payment of £54,629.37 (equivalent to one month of pay for each year worked).
Mrs Elliot brought a claim of direct age discrimination, arguing that the ‘pension age cap’ put her in a less favourable position compared to younger colleagues.
Decision
The Employment Tribunal (ET) considered that the burden of proof shifted, as factually Mrs Elliot was receiving less than half as much as a comparator in their 50s.
The PHSO accepted that operating a ‘pension age cap’ was treating Mrs Elliot less favourably because of her age, but it argued that it was justified as it furthered a legitimate aim; there was less need for a ‘financial cushion’ when an employee was able to draw their pension during the time they were looking for a new job.
Objective justification
It was PHSO’s responsibility to show that the pension age cap was a proportionate means of achieving a legitimate aim.
The ET held that the aim was legitimate. The aim was to find a way to provide a fair financial cushion to employees who had been made redundant. It agreed receipt of a pension was a guaranteed source of income which meant there was less need for a financial cushion on redundancy.
However, the ET held that the pension age cap was not a proportionate means of achieving that aim. The ET considered the following factors:
many over 60s have housing costs which they may not be able to afford on a civil service pension;
Mrs Elliot had a caring role, as did a significant proportion of those over 60, who may have children continuing or returning to live at home;
Mrs Elliot’s age made it less likely that she would get another role, compared to her younger peers; and
a statistically high number of civil servants continue to work after the date they can take their pension so that they are able to cover their living costs.
The ET therefore concluded that it was Mrs Elliot’s age at the date of the VE payment which was the main factor for her disadvantage in the level of the VE payment and her inability to get a job. The ET commented that there would be more proportionality in a system which considered the length of service of the employee and the receipt of a guaranteed pension.
The claim for direct age discrimination succeeded.
The judgment is available here.
Mrs J Elliot v Parliamentary and Health Service Ombudsman 2200464/2018