Redundancy is an unpleasant reality for many employees, and when the selection criteria include salary levels, questions about fairness and discrimination can arise. A common concern is whether high earners who are selected for redundancy can claim indirect age discrimination. This article explores this topic in a practical way highlighting key legal points and providing guidance for both employees and employers.
Understanding Indirect Age Discrimination
Indirect age discrimination occurs when a seemingly neutral policy or criterion puts people of a certain age group at a disadvantage compared with others. Unlike direct discrimination, where someone is treated less favourably because of their age or any other protected characteristic, indirect discrimination focuses on the effect rather than the intention behind a policy.
For example, a redundancy policy that prioritises retaining lower paid employees may appear neutral. However, if higher paid roles are predominantly held by older workers, this could indirectly disadvantage older employees and trigger a claim of indirect age discrimination under the Equality Act 2010.
High Earners and Redundancy Selection
Employers often use objective criteria when making redundancies, such as:
- Performance data
- Skills and qualifications
- Disciplinary sanctions
Choosing to target higher earners for redundancy is generally seen as a cost saving measure. On the face of it, this is not discriminatory. However, the key legal question is whether the policy disproportionately affects employees of a certain age group.
Research and workforce demographics can reveal patterns. For instance, if most high earners in a business are aged over 50, the policy could disproportionately impact older employees, even if the employer did not intend to discriminate. This is the essence of indirect age discrimination.
Legal Framework
Under the Equality Act 2010, an employee may bring a claim for indirect age discrimination if they can show:
- A provision, criterion, or practice (PCP) was applied.
- The PCP puts, or would put, employees of a particular age group at a disadvantage.
- The employee suffered a detriment as a result.
The employer can defend their decision to include salary as a selection criteria by showing it is a proportionate means of achieving a legitimate aim. In redundancy situations, legitimate aims often include cost reduction, organisational efficiency, or role consolidation. The defence requires showing that the means chosen were reasonable and necessary.
Practical Considerations for Employees
If you are a high earner facing redundancy and are concerned about indirect age discrimination, consider the following steps:
- Review the selection criteria – Ask for clarity on how redundancy decisions were made. Were salary levels the sole criterion, or were other factors considered and if so what were those factors?
- Assess the impact on age groups – If older employees are disproportionately affected, there may be grounds to explore a claim.
- Document communications – Keep emails, letters, and any formal communications regarding redundancy decisions that you receive from your employer.
- Seek advice early – Contact ACAS or a qualified employment lawyer to understand your rights and potential remedies. They may advise you to appeal the redundancy outcome, raise a grievance if you are still employed or start a legal claim.
Practical Considerations for Employers
Employers can reduce the risk of indirect age discrimination claims by:
- Conducting an impact assessment – Before implementing redundancy plans, check whether the criteria could disproportionately affect a particular age group.
- Using multiple criteria – Avoid relying solely on salary or age related factors. Consider skills, performance, relevant qualifications and role requirements to create a balanced approach for your scoring matrix.
- Documenting decisions – Maintain a clear record of how redundancy decisions were made, demonstrating objective and proportionate reasoning.
- Communicating transparently – Clearly explain the rationale behind redundancy selection, ensuring employees understand the legitimate business reasons.
- Offering alternative options – Consider voluntary redundancy, redeployment, or part-time options to reduce the impact of redundancy.
Being a high earner does not automatically prevent an employee from claiming indirect age discrimination in redundancy. The critical factor is whether the redundancy selection criteria disproportionately disadvantage a particular age group. Employers should take proactive steps to ensure their processes are fair, proportionate, and well-documented, while employees should seek advice and understand their rights. By balancing cost saving measures with fairness, both employers and employees can navigate redundancies with greater confidence and reduce the risk of potential legal challenge.
Do you have any questions about today’s blog, need help in becoming legally compliant with contracts/policies or can we support you in taking away any people pains to give you peace of mind?
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Why not also check out last weeks blog Can An Employer Make Deductions For Training Costs When an Employee Leaves if There is no Training Cost Agreement in place?
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