Appeal No. UKEAT/0566/12/SM
EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8AE
At
the Tribunal
On
29 October 2013
Before
THE HONOURABLE MR JUSTICE MITTING
MR C EDWARDS
MR G LEWIS
MS
P HERON APPELLANT
SEFTON
METROPOLITAN BOROUGH COUNCIL RESPONDENT
Transcript of Proceedings
JUDGMENT
THE HONOURABLE MR JUSTICE MITTING
1.
The Claimant was born on 6 July 1950. On
28 August 1995 she began employment with the Training and Enterprise
Council, a body set up by central Government but one whose terms and conditions
did not include the Civil Service Compensation Scheme, to which we will refer
in due course. On 29 March 2001 her employment was transferred to
the Learning and Skills Council, another central Government agency, but one
whose terms and conditions did.
2.
The continuity of her employment and her rights were preserved under the
predecessor to Transfer of Undertakings (Protection of Employment)
Regulations 2006. On 1 April 2010 her employment was again
transferred to Sefton Metropolitan Borough Council, Sefton, on the same
conditions with minor irrelevant variations. On 8 July 2010 notice
of dismissal by reason of redundancy was given to her, expiring on 30 September 2011.
The Claimant was then aged 61. She had 10.5095 years of reckonable service
under the Civil Service Compensation Scheme, as did younger colleagues who were
also dismissed by reason of redundancy at the same time. They, however,
negotiated an agreement with Sefton, under which they were not required to
serve out their notice but were paid two months’ pay in lieu of notice.
3.
The Claimant did not accept that proposal because it was put to her as
part of a compromise agreement, which would have required her to abandon the
argument and claim that she now brings. Consequently, she alone of the
dismissed employees served her notice period.
4.
She received six months’ pay as a redundancy payment. It was not
subject to the statutory cap set out in part 11 of the Employment
Rights Act 1996. It was based upon her actual gross pay. Her younger
colleagues all, as we have said, with the same length of service and reckonable
service as her received a redundancy payment based upon their years of reckonable
service, 10.5095 years.
5.
Aggrieved by the obvious difference in treatment between her and her
colleagues, the Claimant complained to the Employment Tribunal. The Employment
Tribunal identified two determinative issues. One, were Sefton in breach of
contract in paying only six months’ redundancy pay to the Claimant; two, if
not, did Sefton treat the Claimant less favourably than they did treat, or
would have treated another employee in relation to the amount of the redundancy
payment, because of her age, contrary to s. 13(1) of the Equality Act
2010.
6.
The first issue requires the terms of the Claimant’s contracts of
employment and those of comparable employees aged below 60 at the date of
dismissal, as to the calculation of a redundancy payment, to be examined. When
the Claimant was employed by the Learning and Skills Council she was in
employment of a kind listed in Schedule 1 to the Superannuation Act 1972
(see Schedule 1, paragraph 6(1) of the Learning and Skills Act
2000, which added employment with the Learning and Skills Council to that
list). Section 1(1) of the Superannuation Act 1972 empowers the
Minister of the Civil Service to:
“(a) […] make, maintain, and administer schemes […] whereby
provision is made with respect to the pensions, allowances or gratuities which
[…] are to be paid to or in respect of such of the persons to whom this section
applies as he may determine.”
7.
Section 1(4)(b) applied section 1(1) to employment in any of the
kinds of employment listed in Schedule 1. “Schemes” made and amended by
the Minister were required to be laid before Parliament and approved under the
negative resolution procedure. The Civil Service Compensation Scheme 1994 was
made by the Minister and laid before Parliament under section 1, as were
all subsequent amendments. The version of the scheme applied by Sefton in the
case of the Claimant was laid before Parliament on 22 December 2010
and not disapproved.
8.
A difficult issue might have arisen in relation to the current version
of the scheme of a kind that is presently before the Court of Justice in
Luxembourg, namely whether or not amendments to the scheme subsequent to the
transfer of employment to an employer which is not within the statutory scheme
apply to the terms of employment of an affected individual. That difficult
issue does not arise for decision in this case because the Claimant accepts
that, by one means or another, the terms of the current version of the Civil
Service Compensation Scheme apply to her.
9.
It is common ground that on the transfer of employment from the Learning
and Skills Council to Sefton, the Claimant remained contractually entitled to
benefit from the Civil Service Compensation Scheme in the event of dismissal by
reason of redundancy. Relevant provisions of the scheme are as follows.
Part 12.5, headed “Compulsory Redundancy Terms” provides:
“12.5.1 This Part applies to a person (“P”) if P—
(a) has at least two years Service;
and
(b) leaves Service in circumstances
where Compulsory Redundancy terms apply.
12.5.2 If this Part applies to P, P is eligible for a lump sum,
which is the lesser of—
(a) an amount calculated in
accordance with rule 12.5.4; and
(b) the Compulsory Departure Maximum.
[…]
12.5.4 An amount if calculated under this rule by—
(a) determining the length of P’s
Reckonable Service in years; and
(b) multiplying one‑twelfth of
P’s Pay by the length of P’s Reckonable Service.”
10.
The “Compulsory Departure Maximum” is defined in Part 12.1 as
having the meaning set out in rule 12.1.7. 12.1.7 provides:
“For the purposes of rule 12.5.2(b), the Compulsory
Departure Maximum in relation to a person (“P”) is—
(a) where P is below
Pension Age on P’s last day of Service the lesser of
(i)
P’s Pay; and
(ii)
the Tapering Maximum
(b) where P is at or above
Pension Age on P’s last day of Service, half of P’s Pay;”
We need not trouble with the Tapering Maximum, which applies only
to someone aged between 59½ and 60.
11.
The Claimant’s entitlement under her contract after its transfer to
Sefton is, therefore, clear. She was entitled to a redundancy payment
calculated by reference to half of her monthly pay subject to a cap of
12 times, or, in simple terms, half a year’s pay. Because her reckonable
service was 10.5095 years, the cap applied to her. Her contractual
entitlement was, therefore, different from that which it would have been had
she been aged less than 60 at the date of dismissal.
12.
The second issue, therefore, arises. Making a payment to an employee
with at least two years service who is over 60 on dismissal by reason of
redundancy, which is half that which would be paid to a similar employee
similarly dismissed who is under 60, is clearly less favourable treatment. It
is because of a protected characteristic: age. It amounts to direct
discrimination under section 13(1) of the Equality Act 2010, unless
justified under section 13(2) or otherwise deemed not to be prohibited.
If so, it is an unlawful act of discrimination under section 39(2).
13.
Sefton advanced two reasons why it was not unlawful: one, it was not
deemed to be a contravention of section 39(2) by paragraph 1(1) of
Schedule 22 to the 2010 Act; two, it was a proportionate means of
achieving a legitimate aim and so justified under section 13(2). The
Employment Tribunal upheld Sefton’s case on issue one but said that
Mr Kenward, counsel for Sefton, “rather skimmed over” the second issue and
that it was “not Mr Kenward’s defence to the age discrimination claim”.
The Tribunal found for Sefton on the first issue.
14.
Schedule 22 to the 2010 Act provides:
“Statutory authority
1(1) A person (P) does not contravene a provision specified in
the first column of the table, so far as relating to the protected
characteristics specified in the second column in respect of that provision, if
P does anything P must do pursuant to a requirement specified in the third column.”
The first column specified “Parts 3 to 7”, the second, “Age” and
the third, “A requirement of an enactment”.
15.
“Enactment” is defined, as regards England, by section 2(1)(2) of
the 2010 Act as:
“(a) an act of Parliament
[…]
(d) Subordinate legislation.”
16.
“Subordinate legislation” is defined in section 2(1)(2) as respect England as:
“(a) subordinate legislation within the meaning of the
Interpretation Act 1978.”
17.
Section 21(1) of the Interpretation Act 1978 defines
“Subordinate legislation” as:
“Orders in Council, orders, rules, regulations, schemes,
warrants, byelaws and other instruments made or to be made under any Act.”
18.
The Civil Service Compensation Scheme was a scheme “made” by the
Minister for the Civil Service under section 1 of the Superannuation
Act 1972 and laid before Parliament. It is, therefore, “subsidiary
legislation” as defined in section 2(1)(2) and is, therefore, “an
enactment” within paragraph 1(1) of Schedule 22 to the 2010 Act. It
provides for the difference in treatment between employees dismissed by reason
of redundancy who are over and under 60 at the date of dismissal, but it does
not require that difference to be respected. A requirement is something
which means that the person subject to it cannot do otherwise, hence the words
of paragraph 1(1) of Schedule 22, “anything P must do pursuant to a
requirement”.
19.
At one stage during the course of argument Mr Kenward for Sefton
suggested that the local authority was prohibited by other enactments from
making a payment in the sum claimed by the Claimant, but that argument, upon
proper analysis did not hold water and he rightly did not pursue it. It is,
therefore, unnecessary for us to refer further to it.
20.
Although the Civil Service Compensation Scheme provided for the difference
in treatment, it did not require even the Minister for the Civil Service to
give effect to it, still less did it require Sefton to do so. This scheme did
not apply directly to the Claimant’s employment by Sefton. Its terms were
incorporated into her contract of employment by Sefton when it was transferred
to her. From that moment onward, the terms became contractual not statutory so
that even if the scheme must be interpreted as requiring Sefton to pay no more
than six months pay, any requirement in relation to the Claimant was not a
requirement of an enactment. It was a requirement of a contract which
incorporated the terms of an enactment.
21.
For the exception in paragraph 1(1) of Schedule 22 to the 2010 Act
to apply the enactment must have direct effect upon the particular
circumstances of the Claimant. On the facts of this case it did not. Further,
and in any event, even if it had done it would have required to have been
justified. Further, and in any event, it seems that Sefton did not regard themselves
as bound not to depart from the terms of the scheme because, as part of the
compromise agreement to which we have referred, they agreed to grant two
months’ pay in lieu of notice in addition to the 10.5095 years reckonable
service to those of their employees who were dismissed by reason of redundancy
but were aged less than 60.
22.
It follows, therefore, that Sefton’s argument that they were required by
an enactment to discriminate between the Claimant and younger dismissed
employees should have been rejected by the Tribunal. In not rejecting it, the
Tribunal based its conclusion upon a basic error of law, which we can and
should correct. In theory, that does not dispose entirely of the appeal
because Sefton faintly raise in their Grounds of Resistance a justification
argument under section 13(2) of the 2010 Act. What they said in
paragraphs 42 to 44 of their Grounds of Resistance was the following:
“42. The legal defence of justification potentially applies to
the use of a provision which would otherwise, at face value, involve
discrimination on the grounds of age. This would potentially mean that the
Tribunal would need to be satisfied that the six months cap which was applied
amounted to a ‘proportionate means of achieving a legitimate aim’ (Equality Act
2010 s.13(2)).
43. In Loxley v BAE Systems Land Systems Ltd
[2008] ICR 1348, EAT it was held that provisions in a redundancy scheme
preventing employees of retirement age receiving redundancy payments because
they were already entitled to a pension could be a legitimate feature of the
scheme. It would be for the Tribunal to decide whether the exclusion of an
employee from the scheme in question had achieved a legitimate objective and
had been proportional to any disadvantage suffered.
44. However, the simple position is that the CSCS is a statutory
scheme. The Council had no discretion in the calculation of the Claimant’s
lump sum. In relation to age discrimination, under Equality Act 2010
Schedule 22 paragraph 1, the Council does not contravene the
provisions in respect of age discrimination where it does anything which it
must do pursuant to the requirement of an enactment. This will include
complying with an instrument made by a Minister of the Crown under an Act.”
23.
Accordingly, it is clear from the Grounds of Resistance that while not
formally abandoning any attempt to justify discriminatory treatment under
section 13(2), they did not rely on it substantively. In his witness
statement, Mr Dale, the Head of Corporate Personnel for Sefton, devoted a
single paragraph to the issue of justification, paragraph 46:
“46. It is important to consider the rationale for the
compulsory lump sum being halved in the case of an employee who had reached the
applicable Pension Age. Ordinarily an employee will have lost his or her only
source of income. They are being compensated for the fact that they find
themselves in that situation (and assisted through it). In the case of a
person of ‘Pension Age’ the position is different, as illustrated by example (c)
in the Civil Service Compensation Scheme December 2010 ‘Guidance for Pension
and Service Centres’ which gives the example of ‘David’ who is 63 years of
age and a pension scheme member. He earns £24,000 per year and has eight years
service. He is compulsorily redundant. His payment is calculated at 6 x
£24,000/12. The example ends by stating that ‘David’s pension (and any pension
commencement lump sum he chooses to take) will come into payment immediately
after his last day of service’.”
24.
On that sketchy evidence, even if the issue had been advanced seriously
as a reason to dismiss the claim, it would not have been open to the Tribunal
to conclude that the statutory justification under section 13(2) was made
out. The evidence of Mr Dale gets nowhere near identifying, let alone
justifying, the “legitimate aim” required for the defence of justification to
succeed under section 13(2), still less to permit the Tribunal to conclude
that it was a proportionate means of achieving a legitimate aim.
25.
In current circumstances when, as is notorious, men and women over 60
remain in large and increasing number members of the active labour force and
may well require income from earnings to maintain their standard of living, the
idea that the simple fact that a woman over 60 might be able to draw her state
and civil service pension, so justifying a difference in treatment between her
and a younger colleague will not do. Statistical evidence, no doubt collated
by and available to central Government, would be required to begin to justify
the difference in treatment, especially now that the age of compulsory
retirement in the civil service has been raised from 60 to 65.
26.
Where, as here, a statutory scheme incorporated by contract into the
contract of employment of a local government authority not listed in
Schedule 1 to the Superannuation Act 1972 is in issue, it
is likely that the local authority would have to justify the difference in
treatment by reference to local conditions and the circumstances of their
employees looked at as a whole. Mr Dale made no attempt to do that,
understandably, for it was his view that he was required to act as he did under
the Civil Service Compensation Scheme.
27.
Accordingly, on the material presented to the Tribunal by Sefton, the
only answer which could have been given was that the justification was not made
out. Mr Kenward, in a valiant effort to rescue the difficulty into which
Sefton have been placed by the stance adopted before the Employment Tribunal,
has submitted that if we are against him on the first and determinative issue
we should remit the matter to the Tribunal to re-determine justification. We
do not accept that submission. Sefton chose the ground upon which it fought
this claim. On appeal it has lost on that chosen ground. Like any other
litigant, it cannot be granted the benefit of running a different case or, at
any rate, a case only vestigially run and which they now wish to flesh out at a
remitted hearing. Litigation must come to an end, parties must deploy their best
argument first time round and not seek a second bite at the cherry when their
chosen argument fails.
28.
There remains one issue to be determined. In her submissions, the
Claimant faintly contended that she should be entitled to a redundancy payment
calculated not by reference to her reckonable years of service but by reference
to the payment including two months pay in lieu of notice actually paid to her
younger colleagues. This was not an issue expressly dealt with by the
Tribunal, for understandable reason, but we understand it to be common ground
that the two months’ pay in lieu of notice was not, expressly at least, an
increase in the reckonable years of service upon which the payment was
calculated but a separate payment made to the Claimant’s younger colleagues to
induce them to accept the package proffered. The same was offered to her. For
reasons which are entirely understandable and which we have already set out,
she rejected it. She rejected it because it would have meant abandonment of
her meritorious claim of age discrimination.
29.
Her position is, therefore, is not precisely comparable with that of
younger colleagues when it comes to calculating reckonable service. She is
entitled, in our judgment, to a redundancy payment calculated by reference to
her reckonable service as if she were not being treated less favourably than
someone who was less than 60 at the date of dismissal. Her reckonable service
was 10.5095 years, therefore, instead of the payment which she did
receive, £16,881, she should have received £29,481.77. We allow her appeal.
We direct that Sefton pay that sum to her as a contractual entitlement.