UK Court of Appeal considers employer justification of indirect discrimination on the basis of financial concerns
The UK Court of Appeal has considered the extent to which employers can justify a measure which indirectly discriminates on the basis of age by relying on cost concerns. The Court found that if the substantial purpose in introducing the measure is to avoid increased costs, this will constitute an illegitimate aim and will not be justified.
Mr. Heskett worked as a probation officer. Because of funding cuts, changes were made to the rate at which probation officers progressed up the salary scale. The changes meant that it would take someone 23 years to reach the top of the salary scale, compared with 7 or 8 years previously.
Mr. Heskett took an action arguing that the change constituted indirect age discrimination however, he failed in the employment tribunal and on appeal. The employment appeals tribunal found that the new pay policy was objectively justified as it was crafted to distribute the loss incurred as a result of funding cuts in a fair and equitable way.
The Court of Appeal looked at whether the employer was improperly relying on cost to justify the discriminatory effects of the policy. European and national precedent has stated that cost alone cannot justify indirect discrimination but it can form part of a wider justification. In assessing cases, the Tribunal must consider the overall picture in order to determine whether the sole aim is to avoid increased costs or whether there is a broader legitimate aim.
The Court acknowledged that reducing staff costs in order to balance the books can be a legitimate aim, and the question becomes whether the measures are proportionate. The Tribunal must then take into account the nature and extent of the financial situation of the employer and whether it could have been addressed in a manner that was not discriminatory.
The Court upheld the decision of the Tribunal, as the employer was relying on ‘absence of means’ which it distinguished from cost cutting. The Court accepted that operating within its budgetary means was a legitimate aim. The Court agreed with the Tribunal that the new policy sought to equitably share the financial constraints and was a proportionate short-term response.
Click here to read the full judgement in Heskett v Secretary of State for Justice.