Smith v Budgen & Ors (Age Discrimination)

For the comparator exercise in a direct age-discrimination claim, a difference consisting of age, or of a factor inextricably linked to age, cannot make the claimant’s circumstances materially different from those of the comparator. It is the very difference which the comparison is intended to test.

Where a severance scheme pays less to employees entitled to an unreduced pension at a specified age, the employer’s explanation that they have less need for compensation does not invalidate the comparator at the first stage. That explanation may instead fall for assessment as objective justification under the Equality Act 2010.

Two civil servants, both members of the Principal Civil Service Pension Scheme, accepted or were eligible for voluntary-exit arrangements under the Civil Service Compensation Scheme. Employees aged 60 or over, who could draw an unreduced pension, received a maximum severance payment of six months’ salary. Younger employees could receive up to 21 months’ salary, subject to tapering.

The London Central Employment Tribunal dismissed the claims at a preliminary hearing. It held that employees already entitled to an unreduced pension were in materially different circumstances from younger comparators for the purposes of section 23 of the Equality Act 2010. The claimants appealed. The central issue was whether pension entitlement, where linked to age, could provide the material difference needed to invalidate the comparison.

1. Appeals allowed. The Employment Tribunal erred in law by holding that the claimants and younger comparators were in materially different circumstances. The appeals were remitted to the same Tribunal to determine objective justification.

2. Sections 5, 13 and 23(1) of the Equality Act 2010 require a comparison which excludes immaterial differences, but the protected characteristic itself cannot be used as the difference which defeats the comparison. The EAT applied the binding reasoning in Lockwood, [2013] EWCA Civ 1195. A comparator must be in the same position in all material respects save for not sharing the protected characteristic.

3. The relevant comparison was between employees in the same pension scheme. The claimants could ask why they received less severance compensation than younger colleagues. The answer was that the younger colleagues were younger. Eligibility for an unreduced pension was dependent on age in the scheme and could not be treated as an incidental or independent difference at the comparator stage.

4. The Tribunal’s reasons concerning a younger employee’s need for a financial cushion, bridge to retirement, and replacement income were features consequent on age. They could potentially support an argument that the disparate treatment was a proportionate means of achieving a legitimate aim under section 13(2), but could not establish that there was no valid comparator.

5. The EAT expressed no view on objective justification. That remaining issue was remitted to the original Tribunal, which was well placed to consider it because of its knowledge of the scheme.

• Employment Appeal Tribunal: Allowed the claimants’ appeals and remitted the objective-justification issue to the same Tribunal: [2014] UKEAT 0308_12_2301.
• Employment Tribunal, London Central: In reasons sent on 13 March 2012, dismissed the direct age-discrimination claims at a preliminary hearing, holding that the claimants and younger comparators were in materially different circumstances.