Budgen v Smith & Ors (Age Discrimination)

For a direct age-discrimination comparison, circumstances cannot be treated as materially different merely because they consist of age or factors inextricably linked to age. A claimant may compare their treatment with that of a younger colleague in the same scheme where, apart from age, their circumstances are the same or not materially different.

An employer’s explanation that younger employees need greater financial protection after dismissal concerns objective justification. It does not invalidate the comparator at the first stage. Eligibility for an unreduced pension, where it depends on age, cannot itself provide the material distinction.

Two civil servants, both aged over 60, accepted or were eligible for voluntary exit under the Civil Service Compensation Scheme. They received a maximum severance payment of six months’ salary because they could draw an unreduced pension. Younger members of the same pension scheme could receive up to 21 months’ salary.

The London Central Employment Tribunal, in reasons sent on 13 March 2012, held at a preliminary hearing that the claimants and younger comparators were in materially different circumstances under section 23 of the Equality Act 2010. It dismissed the direct age-discrimination claims without considering objective justification.

The claimants appealed. The central issue was whether immediate entitlement to an unreduced pension could make the younger comparators materially different for the statutory comparison.

1. Appeals allowed. The Employment Tribunal erred in law by finding that the claimants’ comparators were invalid. The claimants and younger employees in the same pension scheme were not in materially different circumstances for the purposes of section 23(1) of the Equality Act 2010.
2. The statutory comparison requires a comparator who is in the same position in all material respects save for the protected characteristic. Applying and following Lockwood v Department of Work and Pensions and Cabinet Office [2013] EWCA Civ 1195, age cannot itself, or through consequences of age, be used to invalidate the comparison.
3. The decisive condition for the higher payment was, in substance, age. The claimants were entitled to ask why their younger colleagues received more compensation, and the answer was that those colleagues were younger. The fact that the claimants could draw an unreduced pension did not create a material difference at this first stage, because that entitlement was linked to age.
4. Considerations concerning a younger employee’s need for an income cushion, bridge to retirement, or pension position may be relevant to whether different treatment is a proportionate means of achieving a legitimate aim. They concern objective justification, not whether there is a valid comparator. The Tribunal had wrongly allowed such considerations to determine the preliminary comparison issue.
5. The case was remitted to the same Employment Tribunal to determine whether the treatment was objectively justified. The Appeal Tribunal expressed no view on that issue.

• Employment Appeal Tribunal: Appeals allowed. The preliminary decision that the younger comparators were materially different was set aside, and the justification issue was remitted.
• Employment Tribunal, London Central: In reasons sent on 13 March 2012, the Tribunal held that the claimants and younger comparators were in materially different circumstances under section 23 of the Equality Act 2010 and dismissed the claims.