Case law: Employers discriminate if they don't offer an older employee voluntary redundancy because it will cost more

Employers should consider whether their decision not to offer an older employee voluntary redundancy is because they will be entitled to more compensation than a younger employee. If it is, they risk an age discrimination claim.

There is direct discrimination against an employee if they are treated less favourably than a real or hypothetical 'comparator' because of a protected characteristic such as age, gender or race. If the characteristic is age, the discrimination may still be lawful provided the employee's treatment can be objectively justified as a proportionate means of achieving a legitimate aim.

A regional director was over 50 years of age and was refused voluntary redundancy, and given an alternative role. Had he been offered voluntary redundancy he would have been entitled to enhanced retirement benefits and his overall leaving package would have been more than £500k. Two other directors, aged under 50, were not entitled to enhanced retirement benefits. They were offered voluntary redundancy.

There was further restructuring the following year. In the meantime, the retirement benefits had changed and employees only became eligible for enhanced benefits at 55. In the course of this further restructuring the director was made redundant but, this time, he did not qualify for the enhanced package. He claimed his employer's failure to offer him voluntary redundancy the previous year was age discrimination.

The Employment Appeal Tribunal (EAT) ruled that the employer had failed to offer him voluntary redundancy because its costs would be higher if they made him redundant, and not than the employees who were under 50. Such a failure was a direct result of his age and therefore discriminatory. It remitted the case back to the Employment Tribunal to consider whether the discrimination was objectively justified and therefore lawful.

Operative date

• Now

Recommendations

• Employers should consider whether their decision not to offer an older employee voluntary redundancy is because the employee will be entitled to more compensation than someone younger – or risk an age discrimination claim

Case ref: Donkor v The Royal Bank of Scotland [2015] UKEAT 0162_15_1610