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Director over 50 claims age discrimination when denied voluntary redundancy

The recent case of Donkor v Royal Bank of Scotland involved a director denied the opportunity to apply for voluntary redundancy as this would have entitled him to claim enhanced retirement benefits of over £500,000. Given these benefits were only available to employees over 50, the Employment Appeal Tribunal had to decide whether preventing him applying for redundancy was unlawful age discrimination.

Under the Equality Act 2010, direct discrimination occurs when an employee is treated less favourably than a comparator because of a protected characteristic and, in the case of age, the treatment is not a proportionate means of achieving a legitimate aim. Claimants need to show the circumstances of a real or hypothetical comparator are not materially different from their own.

Donkor was one of four regional directors not selected for interview for an alternative position when there was a restructuring at the bank. Two of the four directors not selected were under fifty, two of them were over fifty. The two younger regional directors and Donkor applied for voluntary redundancy. The two directors under 50 were given redundancy. Had Donkor been able to take early redundancy, a pension enhancement he was entitled to because he was over 50 would have brought his overall severance package to more than £500,000. Given there were alternative positions within the bank which he could do, this approval was not given. He was given an alternative role and told he could not apply for redundancy.

The following year there was a further restructuring, but by then the pension rules had changed and only those over 55 years were eligible for the enhanced early retirement benefits. This meant Donkor was no longer eligible for the severance package of over £500,000 and he claimed the refusal to grant him voluntary redundancy in the previous year was age discrimination.

An employment tribunal held that the employees under 50 who were permitted voluntary redundancy were not appropriate comparators as there was a material difference between them and Donkor; namely they were not eligible for the enhanced early retirement benefits.

The Employment Appeal Tribunal overturned this decision. The fact that the employer’s severance costs for Donkor were higher was a direct result of his age. As such, if the reason he was not able to apply for voluntary redundancy in the first restructuring was his eligibility for enhanced retirement benefits, this in itself was direct discrimination on the grounds of age. So the employer was, on the face of it, discriminating against him in taking the retirement benefits into account. The EAT remitted the case to the tribunal to see if there was evidence to show the employer’s actions were objectively justified.

Added: 27-01-2016

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