HM Land Registry v Benson & Ors

An employer’s legitimate decision on the allocation of financial resources may constitute a real need for the purpose of objectively justifying indirect discrimination. The employer need not prove that a less discriminatory alternative was impossible or that further expenditure would cause insolvency.

The tribunal must balance that need against the discriminatory impact and decide whether the measure is proportionate. Where an oversubscribed voluntary redundancy or early-retirement scheme has a legitimate fixed budget, and the discriminatory selection criterion is the only practicable means of selecting applicants, its use may be justified. Conversely, a criterion excluding employees on long-term career breaks cannot be proportionate where it is applied unfairly by denying them notice and the opportunity to bring forward their return to work.

The appellant operated an oversubscribed voluntary redundancy and early-retirement scheme for employees affected by office mergers. Five respondents aged 50 to 54 were not selected because their immediate, unreduced pension entitlements made them relatively expensive to release. The Employment Tribunal upheld their indirect age-discrimination claims, holding that the appellant could have afforded to release every applicant.

A sixth respondent, Mrs McGlue, was on a career break. The appellant excluded employees not due to return within the following year, without notifying them of that condition. The Tribunal upheld her indirect sex-discrimination claim.

The appellant appealed both rulings. The central issues were whether a fixed scheme budget formed part of the employer’s legitimate need, and whether the exclusion of a career-break employee was proportionate when she had not been given a fair opportunity to advance her return date.

1. The appeal was allowed as to the five age-discrimination claims, which were dismissed. The relevant PCP should have been identified as the cheapness criterion, because it was the feature of the selection process that caused the disparate age impact.

2. The appellant had legitimate aims in reducing headcount, controlling costs and implementing the office-merger scheme. Its decision to limit expenditure on the scheme to £12 million was itself a legitimate allocation of resources and formed part of its real need. The Employment Tribunal erred by asking whether the appellant could, in an absolute sense, afford the additional expenditure needed to release every applicant.

3. Objective justification under the Employment Equality (Age) Regulations 2006 does not require proof of absolute necessity. The tribunal must balance the employer’s reasonable needs against the discriminatory effect. The employer’s resource allocation is to be accepted as a genuine need, subject to that balancing exercise.

4. The Tribunal had found both that there was a real need to implement the scheme and that, if selection was required, no satisfactory alternative to the cheapness criterion was practicable. On those findings, the criterion was a proportionate means of achieving the legitimate aims. This conclusion was fact-sensitive and does not mean that a similarly discriminatory criterion will always be justified.

5. The appeal was dismissed as to Mrs McGlue. It was in principle open to the appellant to define reasonable criteria for deciding which career-break employees counted as part of the current office strength. However, Mrs McGlue had a right to return on reasonable notice. The appellant’s failure to notify her of the return-date criterion was unfair because it deprived her of the chance to advance her return. A criterion applied in that unfair way could not be proportionate and could not justify the indirect sex discrimination.

• Employment Appeal Tribunal: Allowed the appeal against the five age-discrimination findings and dismissed those claims; dismissed the appeal against the finding in favour of Mrs McGlue.
• Employment Tribunal, Manchester: By a judgment and reasons sent on 3 February 2011, upheld all six claims. No citation was stated in the judgment.