Heskett v Secretary of State for Justice (Rev 1)

In an indirect discrimination claim, avoiding increased costs is not, without more, a legitimate aim. The court must characterise the employer’s aim fairly by considering the whole picture. A genuine need to reduce or constrain staffing expenditure because of real financial pressures may constitute a legitimate aim.

The employer must still prove that the discriminatory measure was proportionate. This requires scrutiny of the pressures relied upon, the measure’s disparate impact and less discriminatory alternatives. An urgent measure may be justified as a proportionate short-term response even though it could not be justified indefinitely. Such justification ordinarily requires the employer to discontinue or modify the measure within a reasonable time.

A probation officer complained that a reduction in annual pay progression from three spinal points to one disproportionately disadvantaged younger employees, who were less likely to have reached the top of their pay bands. The Employment Tribunal accepted the disparate impact but held that the policy was justified as a temporary and proportionate response to public-sector pay constraints. It dismissed the claim.

The Employment Appeal Tribunal, HH Judge Barklem presiding, dismissed the officer’s appeal. No neutral citation for that decision was stated. The officer appealed to the Court of Appeal, arguing that an absence of financial means could not differ legally from reliance on cost alone, that intended future reform was irrelevant to present justification, and that there was no evidential basis for treating the policy as a stopgap.

The central issues were whether constrained staffing resources could constitute a legitimate aim and whether the policy’s intended temporary duration could support proportionality.

1. Appeal dismissed. Underhill LJ, with whom McCombe LJ and Macur LJ agreed, held that the Employment Tribunal was entitled to find the reduced rate of pay progression objectively justified.

2. The established principle is that saving or avoiding costs does not, without more, amount to a legitimate aim. It applies where the employer’s aim is fairly characterised as solely avoiding increased costs. Courts should examine the whole picture instead of applying the expression “cost plus” mechanistically. The principle derived from Hill and Stapleton and was authoritatively explained in Woodcock v Cumbria Primary Care Trust [2012] EWCA Civ 330.

3. A real need to reduce or constrain staffing expenditure may nevertheless be a legitimate aim. The European authorities did not require courts to ignore genuine financial pressures or choices about allocating a limited budget. NOMS had to operate within the limits imposed by the public-sector pay freeze. Its aim could therefore be characterised as living within its means, rather than simply paying younger employees less because equality would cost more.

4. Recognition of that legitimate aim did not determine proportionality. The employer still had to show that the particular measure was proportionate, taking account of the nature and extent of the financial pressure, the disparate impact and whether less discriminatory alternatives were available. The Tribunal had performed that assessment and found that the available resources had been distributed as fairly as possible.

5. An indirectly discriminatory measure may be justified as a proportionate short-term response to an urgent problem, although it could not remain justified indefinitely. Its intended temporary character and active steps to discontinue or modify it may therefore be relevant. This differs from defending an otherwise unjustifiable state of affairs merely by promising future reform. The Tribunal was entitled to treat the pay policy as a temporary response, while warning that the justification was close to expiring.

6. The Tribunal had a sufficient evidential basis for describing the policy as a stopgap. It could conclude from the nature of the pay freeze and the political unsustainability of prolonged below-inflation settlements that the reduction was regarded as temporary. The principle concerning unsupported inferences in Chapman v Simon did not invalidate that conclusion.

1. Court of Appeal (Civil Division): The appeal was dismissed by [2020] EWCA Civ 1487. The Tribunal had been entitled to find the indirectly discriminatory pay policy justified.
2. Employment Appeal Tribunal: HH Judge Barklem dismissed the claimant’s appeal on 25 June 2019. No neutral citation is stated in the judgment.
3. Employment Tribunal: The London South Tribunal dismissed the indirect age discrimination complaint in a judgment sent to the parties on 12 October 2017.