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Older Workers Entitled to Bigger Redundancy Payments

Employers are entitled to offer older workers bigger redundancy packages than their younger colleagues even if the duration of their service is identical. Rejecting a direct age discrimination claim brought by a civil servant, the Employment Appeal Tribunal ruled that the different treatment of older and younger workers was justified by the greater difficulty the former often endure in finding alternative employment.

A 26-year-old former employee of the Department of Work and Pensions had received a voluntary redundancy payment of £10,849.04 under the Civil Service Compensation Scheme. There was no dispute that, had she been aged over 35, she would have received an additional payment of £17,690.58. It was submitted that the employee’s treatment amounted to age discrimination within the meaning of regulation 3(1) of the Employment Equality (Age) Regulations 2006.

Dismissing those arguments, however, the EAT ruled that older and younger workers were in the circumstances ‘not truly comparable’. The purpose of the different payments was to reflect the comparative difficulties loss of employment posed to older employees in terms of finding another job and family financial commitments. The difference in treatment was a proportionate means of achieving the legitimate aim of producing a proportionate financial cushion for older workers.