Heron v Sefton Metropolitan Borough Council (Age Discrimination)

The statutory-authority exception for age discrimination applies only where an enactment directly requires the discriminatory act. A local authority does not satisfy that condition merely because terms of a statutory compensation scheme have been incorporated into an employee’s contract.

A redundancy-payment cap which treats an employee aged over 60 less favourably is direct age discrimination. The employer must establish a legitimate aim and that the measure is proportionate under section 13(2) of the Equality Act 2010. Bare reliance on the employee’s possible pension entitlement, without adequate evidence, will not do so.

The claimant, aged 61, was dismissed for redundancy by Sefton Metropolitan Borough Council. Her employment had transferred from the Learning and Skills Council with the Civil Service Compensation Scheme incorporated into her contract.

Under that scheme, her compulsory redundancy payment was capped at half a year’s pay because she was at or above pension age. Younger colleagues with the same reckonable service received payments calculated by their full service. The Employment Tribunal rejected her age-discrimination claim on the basis that Sefton was required by an enactment to make the lower payment.

The claimant appealed. The central issues were whether the statutory-authority exception in paragraph 1(1) of Schedule 22 to the Equality Act 2010 applied, whether the treatment was justified, and the proper amount of the remedy.

1. Appeal allowed. Paying the claimant half the redundancy payment payable to an otherwise comparable employee under 60 was less favourable treatment because of age. It was direct discrimination under section 13(1) of the Equality Act 2010, unless justified or protected by the statutory-authority exception.

2. Paragraph 1(1) of Schedule 22 protects conduct which a person must do pursuant to a requirement of an enactment. The Civil Service Compensation Scheme was subordinate legislation and thus an enactment. However, the scheme did not directly govern Sefton’s employment of the claimant. Its terms operated through contractual incorporation following the transfer of employment.

3. The relevant requirement was therefore contractual, not a requirement imposed by an enactment. The scheme provided for age-based treatment but did not require Sefton to apply it in the claimant’s circumstances. Sefton’s willingness to offer younger employees additional pay in lieu of notice also showed that it did not regard itself as unable to depart from the scheme’s terms. The Employment Tribunal’s contrary conclusion was a basic error of law.

4. Sefton had not substantively advanced objective justification before the Tribunal. Its limited evidence did not identify a legitimate aim or show proportionality. The possible availability of a state or civil service pension to a worker over 60 could not, without supporting evidence, justify the differential treatment. In comparable cases involving a local authority, justification would likely require evidence directed to local conditions and the workforce as a whole.

5. The matter was not remitted to allow Sefton to develop a case it had chosen not to run. The claimant was entitled to a payment calculated by her 10.5095 years of reckonable service, as if she were under 60. The additional two months’ pay accepted by younger colleagues was a separate compromise-payment inducement and did not form part of the comparable redundancy calculation. Sefton was directed to pay £29,481.77 as the claimant’s contractual entitlement.

• Employment Appeal Tribunal: allowed the claimant’s appeal and directed Sefton to pay £29,481.77.
• Employment Tribunal: rejected the age-discrimination claim, holding that the statutory-authority exception in paragraph 1(1) of Schedule 22 to the Equality Act 2010 applied.