Voluntary Redundancy: Don’t Consider Age a Factor, Rules EAT

By January 27, 2016Case Review
Tribunal | HR Solutions

Taking age-related benefits into account during redundancy selections can be discrimination, the Employment Appeal Tribunal (EAT) has ruled.

 

The case of Donkor v Royal Bank of Scotland concerned an employee who was not allowed to apply for voluntary redundancy on the grounds of his age.

As the claimant was over 50 at the time the bank put his role at risk, he would have been entitled to enhanced retirement benefits of over £500,000. He was instead offered the chance to apply for voluntary redundancy a year later, after the bank had increased the age threshold for enhanced retirement.

Donkor was one of four regional directors put at risk in 2012 when the bank underwent a restructuring. Of the four, two were under the age of 50. This was the age at which employees were entitled to enhanced retirement benefits.

The Royal Bank of Scotland invited the two younger employees to apply for voluntary redundancy. However, after calculating the cost of the enhanced retirement package that it would have to pay out, the bank asked the two remaining directors to interview for other roles within the business instead.

The claimant’s role was once again put at risk the following year, and this time the bank did invite him to apply for voluntary redundancy. However, in the interim they had changed the age threshold for enhanced retirement to 55.

As the claimant was younger than 55 at the time he was no longer entitled to the enhanced package.

The Employment Tribunal determined that there had been no discrimination, as the bank made its decision based on the cost and legal risk. The EAT refuted this though, and ruled that the bank only considered these factors as a result of the claimant’s age. This was the one differentiation between the claimant and the comparable employees who were allowed to take voluntary redundancy.

The EAT has remitted the case to the Employment Tribunal to find out if the bank had any objective justification for the discrimination.

This ruling highlights that in a case of discrimination, it is key to establish why the action in question took place. If it can be proven that there was a business-relevant cause for an age-related action, then it may be deemed reasonable. Yet if the core reason for the action concerns a protected characteristic, as in this case, then the action may be indefensible.


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