Frettens resident Chartered Tax Advisor, Lee Young, is one of a few solicitors in Dorset to be dual qualified as a Solicitor and Chartered Tax Advisor. In this article, he provides a summary of the budget tax implications.
What is indirect age discrimination?
Indirect age discrimination is where a policy that is applied to all employees negatively affects people in a certain age group. An indirectly discriminatory policy can be justified if it is a proportionate means of achieving a legitimate aim. A legitimate aim of saving costs, on its own, is not enough to justify a discriminatory policy.
Heskett v Secretary of State for Justice
In Heskett v Secretary of State for Justice, the employee was a probation officer. Due to the financial crisis, the government introduced a policy limiting public sector pay increases. Probation officers' pay scales were changed so that employees received only a single pay increment each year instead of three increments. This meant that younger workers took longer to get to the top of the pay scale and were paid less than their older colleagues.
Indirect age discrimination against younger employees
The employment tribunal found that the policy was indirectly discriminatory against younger employees but could be justified. The employer had legitimate aims: to reward loyalty and experience, retain some incentive, avoid redundancies and preserve accrued rights. The employer wasn't relying on costs alone (which wouldn’t be justified), but about an absence of means because of government funding cuts. The changes to the pay policy were proportionate means of achieving the aim of breaking even.
‘Cost Alone’
This case is a public sector case but provides an interesting angle on the 'cost alone' rule. The 'absence of means' principle might not translate so easily into the private sector, where businesses look to operate at a profit rather than break even. Justifying an indirectly discriminatory policy will still depend on whether there is more at stake than simply cost savings. And any cost-driven approach must be proportionate.
Chris Dobbs, Employment Solicitor says “If you are considering introducing a new pay increase policy, or amending your current one, it is always worth consulting an employment lawyer. Changes with the best intentions can often have unintended consequences and potentially unsettle employees.”
At Frettens, all of our solicitors offer a free initial meeting or chat on the phone to answer your questions. If this article raises issues for you or your business, please call us on 01202 499255 and the Employment team will be happy to discuss it with you.
