Labour Research March 2016

Law Queries

Voluntary redundancy packages and age

Q. Is it fair for an employer to offer a voluntary redundancy package to younger employees, but not an older employee due to their entitlement to an enhanced package?

A. On the face of it, this appears to be age discrimination. However, the employer may be able to justify the treatment. 

Age is a protected characteristic under the Equality Act 2010 and so it is unlawful to treat an employee less favourably because of their age, or to apply a policy putting them at a disadvantage.It is possible, however, to objectively justify age discrimination. The employer would have to show the decision was a proportionate means of achieving a legitimate aim.

The employer may also be expected to show a social policy objective, for example, encouraging recruitment of younger employees or rewarding loyalty.

In a recent Employment Appeal Tribunal case (Donkor v The Royal Bank of Scotland UKEAT/0162/15/MC), RBS denied Mr Donkor the opportunity to apply for voluntary redundancy. He was over 50 and so would have been entitled to early retirement benefits. 

The opportunity for voluntary redundancy was offered to two younger employees who were not entitled to the enhanced benefits. The EAT held that denying Donkor the opportunity to apply for voluntary redundancy was direct age discrimination. 

However, a Tribunal will now look at whether the discrimination was justified.