Age related cap on redundancy payments is not discriminatory
Mr Hastie was 62 years old and had been employed by Kraft Foods UK Ltd for almost forty years when a redundancy exercise was implemented. Mr Hastie applied for voluntary redundancy in accordance with his Employer's enhanced contractual scheme which provided for employees to receive three and a half weeks' pay for each year of service. Enhanced payments were, however, capped at the age of 65.
Mr Hastie was accepted for voluntary redundancy but only received £76,560 representing the amount he would have received had he worked to the age of 65. If the cap had not existed then he would have received £90,100, so he suffered a reduction of around £13,600 as a result of the cap.
Mr Hastie pursued a claim for age discrimination in the employment tribunal where he was initially successful at first instance. Kraft Foods then appealed to the EAT.
The EAT held that it was legitimate for such a redundancy scheme to include a cap that was a proportionate means of achieving a legitimate aim. On this basis the cap was justifiable regardless of the effect on any individual employee.
Although this authority is good news for Employers, there is still a need to be cautious in ensuring that these types of voluntary scheme when implemented are not indirectly discriminatory against younger workers especially where length of service is the predominant factor.
Kraft Foods UK Limited -v- Hastie EAT/0024/10
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