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Employment Law

Legal guidance - compliance - software

23 FEB 2015

Indirect age discrimination

Indirect age discrimination
Colin Godfrey
Associate, Veale Wasbrough Vizards

Can a change in contractual terms which has a disparate impact on older workers be objectively justified? In the recent case of Edie and others v HCL Insurance Limited, the Employment Appeal Tribunal (EAT) concluded yes - but it will always depend on the facts.

The claimants were employed by HCL Insurance Limited (HCL). When HCL experienced financial losses, it sought to introduce new terms and conditions for all of its employees. The new terms removed employees' rights to a number of benefits, including private health insurance.

A consultation exercise was undertaken with the employees, during which alternatives were suggested by the employees but rejected by HCL. On 15 June 2011, HCL proceeded with the change and dismissed the employees who refused to agree to the new terms.

The claimants brought claims alleging that the imposition of new terms amounted to indirect age discrimination. They asserted that the requirement to enter into the new terms or be dismissed placed older workers at a disadvantage because, by virtue of longer service, they would have (and in the case of the claimants they had) accrued greater benefits and therefore had more to lose.

The Employment Tribunal (ET) agreed that the requirement to sign up to the new terms was a provision, criterion or practice (PCP) that placed older workers, including the claimants, at a particular disadvantage. It was, however, satisfied that the requirement was objectively justified as a proportionate means of achieving HCL's legitimate aim to reduce staff costs and secure HCL's future.

On appeal the EAT considered in detail the test of objective justification. It noted that the task of the tribunal is to:

- carry out critical evaluation of whether the employer's reasons demonstrated a real need for the action to be taken

- if there was such a need, consider the seriousness of the disparate impact of the action on the affected group (including the claimants), and

- evaluation whether the former is sufficient to outweigh the latter

On the evidence the EAT was satisfied that the ET had properly considered the impact of the proposed changes on the employees and had expressly balanced the real needs of the Respondent against the discriminatory effects of the change.

In assessing the balance, the EAT paid particular attention to whether the ET had considered whether there was a less discriminatory means to achieve the legitimate aim. In that context it was satisfied that the ET had given appropriate weight to the consideration of the alternative measures proposed by the appellants and why they had been rejected by HCL.

The appeal was therefore refused.

Best practice

The case is a useful reminder of the factors that the tribunal will consider when assessing the test of objective justification in a claim of indirect discrimination. It shows the importance for employers of balancing the aim which is sought with the potential discriminatory impact on those affected by it. In the context of changing terms and conditions it will be important to consider (and properly document) alternative options and why they would not achieve the same aim before any action is taken.
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