Need to cut costs justified 'age discriminatory' pay policy

The Court of Appeal has ruled that an employer's need to reduce its staff costs to balance its books could be enough to justify indirect age discrimination.

The case involved the Probation Service and one of its employees, Craig Heskett.

Following the financial crisis in 2008, the government announced a policy in 2010 limiting pay increases across the public sector.

Under the previous policy, a probation officer could progress three pay points each year. Under the new policy, an officer could progress only one pay point per year. It would therefore take Mr Heskett 23 years to progress from the bottom to the top of his pay band, rather than seven or eight years.

While the new policy persisted, older employees at the top, or nearing the top, of the band would earn significantly more in salary and accrue greater pension benefits than those lower down the band.

The Employment Tribunal found that the progression policy was prima facie discriminatory, but that it was justified.

It acknowledged that the government's aim in issuing a pay cap had been a cost-cutting exercise and that the Probation Service had issued the new policy as a temporary measure, not simply to cap pay, but to enable it to live within its means.

The tribunal also relied on the fact that the agency was giving active consideration to changing the system to reduce the age-discriminatory effect.

Heskett submitted that cost alone could not justify indirect discrimination and the agency's future intention to change the system was irrelevant to whether it could be justified at the present time.

The Court of Appeal upheld the tribunal’s decision.

It held that an employer might feel obliged to take urgent measures which had an indirectly discriminatory effect on a group of its employees.

There was no reason in principle why the employer should not justify those measures on the basis that they represented a proportionate short-term means of responding to the problem in question, even if they could not be justified in the longer term.

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