In HM Land Registry v Benson, UKEAT/0197/11/RN,
Judgment on 10 February 2012, HM Land Registry offered employees a voluntary
redundancy/early retirement scheme, with enhanced benefits. It had more
applicants than could be accommodated within the available budget, and a
selection exercise was undertaken. The Claimants were applicants who had
not been selected for release under the scheme. HM Land Registry selected
for release (other things being equal) those applicants whose entitlements
under the scheme would be lowest, thus maximising the numbers who could be
released within the constraints of the budget. The Claimants who alleged
age discrimination were all aged between 50 and 54, and their entitlements were
particularly costly because they would have been in receipt of an immediate
unreduced pension. They claimed that the use of a selection criterion
related to the amount of their entitlements constituted indirect age
discrimination. The ET accepted that the criterion used was the only
practicable criterion if it was necessary to select, but it found that it was
“affordable” for HM Land Registry to release all of those who had applied,
albeit that that would have meant spending an additional £19.7m over the £12m
budgeted; and it held that accordingly selection (necessarily employing a
discriminatory criterion) was not a proportionate means of achieving its
(legitimate) aim of reducing headcount.
The EAT, Underhill J presiding, held, allowing the appeal and
dismissing the claims, that the ET should have proceeded on the basis that the
HM Land Registry’s decision as to what resources to allocate to the exercise,
i.e. £12m, constituted part of its “real need” or “aim”, and that it was not
relevant that it could in an absolute sense have “afforded” to allocate a
larger amount; and that, although the ET was entitled to assess the
proportionality of the means chosen to achieve that aim, its finding that there
was no other practicable alternative meant that on the facts of the present
case it was obliged to hold that the selection criterion chosen was a
proportionate means of achieving that aim.
The EAT distinguished its observations in Pulham v Barking
& Dagenham LBC [2010] ICR 333, in which Underhill J had presided, to
the effect that employers “cannot automatically justify a failure to eliminate
discrimination by allocating the costs of doing so to a particular budget and
then declaring that budget to be exhausted”.
At paragraph 40 of its Judgment in the Land Registry case the EAT said
that they did not believe that what they said about “unaffordability” in that
case was in any way inconsistent with the decision in Pulham. Underhill J said:
“The assessment of
affordability discussed in Pulham
(see in particular para. 43, at p. 355H) was clearly not concerned with
“absolute” affordability: otherwise the claimants would necessarily have
succeeded. As for our observation that the size of an employer’s
budget for a particular purpose could not be decisive of the question of
justification, that must be read in the context of the issue in that
case. The employer was there seeking to justify the continuation of a
directly age-discriminatory pay provision. Its only justification was
that it was too expensive to remove it: that question could not be closed off
by the employer’s own decision as to what budget to allocate for that
purpose. By contrast, the “budget” that we are concerned with in the
present case is the budget for a particular project – namely a redundancy
programme – which is not directly discriminatory, but which, as it turned out,
required a selection exercise which, as it turned out, could only practicably
be done on a basis involving some indirect age discrimination.”
JAMES GOUDIE QC