In Macculloch v Imperial Chemical Industries plc [2008] Ms MacCulloch (M) was made redundant by Imperial Chemicals Industry plc (ICI). She was paid an enhanced redundancy payment, which was calculated on age and length of service. The scheme gave significantly higher payments to older workers. M was nearly 37 years old and thus received only 55% of her gross annual salary compared to up to 175% for her older coworkers.

FACTS

M later claimed that the enhanced redundancy pay was directly or indirectly discriminatory on the grounds of her age and that had she been older she would have had the opportunity of having longer service. The ET accepted that the calculation was, on the face of it, directly and indirectly discriminatory. However, it upheld ICI's defence that the calculation was objectively justified. Therefore M's claims on both direct and indirect discrimination failed.

The EAT looked at the question of whether the ET had correctly applied the objective justification test and held that it had not. The EAT stated that just because the aims of the scheme were held to be legitimate, it did not necessarily follow that the discrimination was justified. One further step needed to be taken. That was to balance the reasonable needs of the employer with the discriminatory effect on the individual – ie to assess whether the discrimination was proportionate.

COMMENT

Although the employer lost the appeal on the basis that the proportionality exercise had not been undertaken, many of the arguments put forward by M to argue that the scheme was unlawful were not accepted by the EAT. Some key points to note are:

  • To ensure that enhanced redundancy schemes are not breaching age discrimination laws, it is necessary to:
  • identify the aims of the scheme;
  • look at how each provision impacts on an individual; and
  • make an assessment as to whether this is reasonably necessary to achieve the objectives of the scheme.
  • The EAT rejected the argument that the scheme could not be regarded as encouraging loyalty when it only rewarded service up to ten years and did not differentiate thereafter.
  • The EAT rejected the argument that it could not be a legitimate aim to encourage older employees to leave as that itself is tainted with age discrimination. It was accepted by the EAT that older employees can be a block on recruitment and that a scheme aimed at encouraging turnover is capable of being a legitimate objective.
  • The EAT made it clear that a scheme that is 'generous' does not constitute a legitimate aim, but if the fact that the scheme was generous helped to ensure that there would be volunteers for redundancy and made planning that much easier, then this could be regarded as a legitimate aim.
  • The broad acceptance of a redundancy scheme by the staff is not sufficient to justify the scheme.

MacMulloch v Imperial Chemical Industries plc
[2008] UK EAT/01 19/08/2207

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