Broadly speaking, to establish a prima facie case of age discrimination employees must show that, because of age, they have been treated less favourably than a comparable employee in not materially different circumstances. A recent case in the Employment Appeal Tribunal (EAT) shows the application of these rules in practice.
The case centred on a restructuring exercise affecting Regional Directors at the Royal Bank of Scotland (RBS). RBS initially indicated that employees who were not invited to interview for new roles would have the chance to apply for voluntary redundancy, which for employees over 50 would also include the option to take early retirement. Two Regional Directors under 50 successfully applied for voluntary redundancy, but Mr Donkin, in his early fifties, was ultimately not given that opportunity after RBS realised that his early retirement benefits would cost around £500,000. Mr Donkin took up an alternative role but later brought a claim on the basis that RBS’ failure to allow him to apply for voluntary redundancy was direct age discrimination.
The EAT held that Mr Donkin had made out a prima facie case of discrimination. The two Regional Directors under 50 were appropriate comparators. Although Mr Donkin was entitled to early retirement benefits and his younger colleagues were not, this was due purely to his age and was therefore not a material difference in circumstances.
The fact that Mr Donkin was prevented from applying for voluntary redundancy amounted to less favourable treatment. The reason for that treatment was the cost of his severance package, which again arose from his age. The EAT confirmed that when identifying the reason for less favourable treatment, the question to ask is not why an employer takes into account an employee’s age, but whether it has done so.
The decision confirms that where an employer applies a criterion which distinguishes between people based on age (or any other protected characteristic), this is itself discriminatory. In cases of direct age discrimination, employers then have the opportunity to justify their actions as a proportionate means of achieving a legitimate aim. In the case of Mr Donkin that point will be considered at a separate hearing, but if RBS relies solely on a costs argument then justifying its approach may prove difficult.