Edie v HCL Insurance BPO Services Ltd

A requirement that employees accept new contractual terms or be dismissed may constitute a provision, criterion or practice for indirect discrimination purposes. The relevant PCP may be the requirement to agree the change, rather than the new terms considered in isolation.

Objective justification requires the tribunal to assess whether the measure is an appropriate and reasonably necessary means of achieving a legitimate aim. The tribunal must weigh the employer’s real needs against the discriminatory impact and consider practicable alternatives. An employer’s need to reduce costs to secure viability and establish market-competitive, non-discriminatory terms may amount to a legitimate aim.

Employees whose employment had transferred to HCL Insurance BPO Services Ltd retained differing contractual terms. HCL required them to accept a new contract removing or reducing certain benefits and altering working hours and annual leave, failing which their employment would end.

The employment tribunal found that the requirement was a PCP and indirectly disadvantaged older employees, but held that it was objectively justified under section 19 of the Equality Act 2010. The employees appealed against the justification finding. HCL cross-appealed against the finding that the requirement could constitute a PCP.

1. Cross-appeal dismissed. The requirement that employees accept new terms in order to remain employed, or face dismissal, was capable of being a PCP under section 19 of the Equality Act 2010. It was applied to employees in different age groups, but placed older employees at a particular disadvantage because they lost existing contractual rights and accepted longer hours and reduced leave.
2. The PCP was discriminatory unless objectively justified under section 19(2)(d). The appropriate approach, derived from Allonby v Accrington College and Hardy & Hansons plc v Lax, required a critical evaluation of the employer’s legitimate aim, the discriminatory effect, the necessity of the measure and available alternatives. The tribunal had to weigh the real needs of the undertaking against the discriminatory effects. [2005] EWCA Civ 846
3. The tribunal had properly identified the legitimate aim as reducing staff costs to secure future viability and establishing market-competitive, non-discriminatory terms. Securing viability and allocating business resources could constitute legitimate aims: HM Land Registry v Benson [2012] ICR 627.
4. The tribunal understood and applied the correct test. It knew the financial circumstances, the impact on employees and the alternatives proposed. It was entitled to conclude that phasing or reducing the changes, obtaining further parental funding or seeking voluntary redundancies would not achieve the stated aim within the required timeframe.
5. The tribunal’s reasoning, read fairly and as a whole, demonstrated that it had itself carried out the required balancing exercise. It had applied the correct burden of proof, which rested on HCL, and its conclusion that the PCP was proportionate was neither perverse nor inadequately reasoned. The employees’ appeal was dismissed.

• Employment Appeal Tribunal: dismissed the employees’ appeals and HCL’s cross-appeal.
• Employment tribunal: dismissed the indirect age discrimination claims, holding that the PCP was objectively justified.