To successfully challenge a complaint of indirect age discrimination about a provision, criterion or practice, employers have to show that it was a proportionate means of achieving a legitimate aim. In Heskett v The Secretary of State for Justice, the Court of Appeal held that the need to reduce or constrain staffing costs can amount to a legitimate aim.
Basic facts
Following the financial crisis in 2010, the coalition government announced a pay freeze in the public sector. Mr Heskett’s employer - the National Offender Management Service - introduced a new pay progression policy whereby probation officers would only be able to progress up the pay scale by one pay point per year, rather than three as had previously been the case. The effect was that progression to the top of the scale would take many years longer for younger probation officers than older ones.
In February 2016, when he was 38, Mr Heskett brought proceedings of indirect age discrimination on the basis that the new pay progression policy disadvantaged those under the age of 50 when compared to those over 50.
Tribunal and EAT decisions
The tribunal agreed that the new progression policy was discriminatory but held that it was a proportionate means of achieving a legitimate aim and was therefore justified. The tribunal found that in light of the pay cap imposed by central government, the pay policy was legitimate to enable the employer to “live within its means”. As such, it was an “absence of means” rather than cost that had forced the Ministry into taking the decision.
Mr Heskett appealed, arguing that the reason for implementing the policy was, in reality, one of “cost alone” which could not amount to a legitimate aim according to case law. The tribunal’s distinction between cost and an absence of means amounted in effect to “a distinction without a difference”.
Dismissing the appeal, the EAT (weekly LELR 636) held that there was indeed a difference between an absence of means and an employer trying to rely solely on the ground of costs. In this case, through no fault of its own, the prison service had had to try to square a circle brought about by central government policy. It held that it was clear from case law that it was legitimate for the prison service to try to break even year-on-year and to make decisions about the allocation of its overall resources.
Mr Heskett appealed again on the grounds that the distinction between costs and absence of means by the EAT was similar to dancing on a pinhead.
Decision of Court of Appeal
The court accepted that saving or avoiding costs (and nothing more) could not amount to a “legitimate aim” justifying discrimination. As such, an employer cannot justify “the discriminatory payment to A of less than B simply because it would cost more to pay A the same as B”.
In the court’s view, the key issue when determining an employer’s aim was whether it was no more than a wish to save costs. If not, the court held that it would be better to focus on how the employer's aim could most fairly be characterised, as part of the bigger picture facing them. In the court’s view, this could include taking into account the constraints within which an employer was having to operate.
It followed that if an employer needed to reduce staff costs in order to balance their books, this could constitute a legitimate aim for the purpose of a justification defence.
Comment
While the court found that the need to operate within a budget can amount to a legitimate aim when justifying discrimination, that is not the end of the matter. The employer will still need to show that the means chosen to achieve that aim are proportionate.