APPEARANCES
| For the Appellant |
MR THOMAS LINDEN
(One of Her Majesty's Counsel)
Instructed by:
Messrs Olswangs LLP Solicitors
90 High Holborn
London
WC1V 6XX |
| For the Respondent |
MR DAVID READE
(One of Her Majesty's Counsel)
Instructed by:
Messrs Baker Gillett LLP Solicitors
11 – 12 Wigmore Place
London
W1U 2LU |
SUMMARY
AGE DISCRIMINATION
PRACTICE AND PROCEDURE – Striking-out
Appeal against refusal of Employment Judge to strike out three heads of an age discrimination claim; cross-appeal against striking-out of fourth.
(1) Judge wrong not to strike out claim of discriminatory selection of redundancy when claim was prima facie implausible and there were no facts indicative of such discrimination.
(2) Judge wrong not to strike out claim based on a difference of age profile between those made redundant before and after the date of introduction of less generous terms as to payment of bonus to dismissed employees – A change of this character did not constitute a "provision criterion or practice".
(3) Judge right not to strike out a claim that the length of service element in the Appellants' redundancy payment scheme was discriminatory.
(4) Judge right to strike out claim that requirement that Respondent sign a compromise agreement as a condition of entitlement to enhanced redundancy pay was age-discriminatory.
THE HONOURABLE MR JUSTICE UNDERHILL (PRESIDENT)
INTRODUCTION
- The Claimant was employed by ABN AMRO Management Services Ltd. ("ABN AMRO") until his dismissal for redundancy with effect from 13 August 2008. He was aged 42 at the time of his dismissal. The last position that he held was Head of Structured Funding and Investments in London, a post at Managing Director level. His redundancy was as a result of the integration process which followed the takeover of ABN AMRO in mid-2007 by a consortium led by Royal Bank of Scotland Group Plc ("RBS"). He was considered for three roles in the integrated organisation but was unsuccessful. On 12 November 2008 he presented a claim in the Employment Tribunal complaining of unfair dismissal and age discrimination. It is disputed whether there is any basis for a claim against RBS, who were never the Claimant's employer, as well as against ABN AMRO; but that issue can be ignored for present purposes and I will refer to both without differentiation as "the Respondents" (although they are in fact the appellants before me). The nature of the age discrimination claim as originally pleaded was not very clear, partly no doubt because the Claimant had not yet received a response to a questionnaire which he had served. But he was directed to lodge Further and Better Particulars, which he did in March 2009; and he was subsequently given leave to amend to advance the claim as there pleaded. The pleaded claim falls under four heads, which I will describe presently.
- The Respondents applied to strike out the age discrimination claim under rule 18 (7) (b) of the Employment Tribunal Rules on the basis that it had no reasonable prospect of success. That application was heard by Employment Judge Pearl, sitting at London Central, over two days in May this year. Mr David Craig of counsel appeared for the Respondents and Mr David Reade QC for the Claimant. By a reserved judgment sent to the parties on 28 May the Judge dismissed the claim under one of the four heads but refused the Respondents' application as regards the remaining three, although in relation to one of them he ordered the payment of a deposit pursuant to rule 20.
- What is before me is the Respondents' appeal against the refusal of the Judge to strike out the three heads of the age discrimination claim, together with the Claimant's cross-appeal against the striking out of the fourth. There is no appeal against the order for payment of a deposit. The Respondents have been represented before me by Mr Thomas Linden QC and the Claimant again by Mr Reade.
- The substantive hearing of the Claimant's claim is listed before the Tribunal for ten days commencing on 8 December. Because it was important that the parties knew where they stood as soon as possible I announced my decision in advance of these written reasons being completed.
- I will take the four disputed heads of claim in turn, but I should first refer to the relevant law.
BACKGROUND LAW
- I should set out the relevant provisions of the Employment Equality (Age) Regulations 2006, which derive directly from the language of the so-called Framework Directive (2000/78/EC). Part 2 of the Regulations, and in particular reg. 7, outlaws age discrimination in the employment field: it is unnecessary to refer to the detailed provisions. Reg. 3 defines age discrimination as follows:
"(1) For the purpose of these Regulations, a person ("A") discriminates against another person ("B") if –
(a) on grounds of B's age, A treats B less favourably than he treats or would treat other persons, or
(b) A applies to B a provision, criterion or practice which he applies or would apply equally to persons not of the same age group as B, but -
(i) which puts or would put persons of the same age group as B at a particular disadvantage when compared with other persons, and
(ii) which puts B at that disadvantage,
and A cannot show the treatment or, as the case may be, provision, criterion or practice to be a proportionate means of achieving a legitimate aim.
(2) A comparison of B's case with that of another person under paragraph (1) must be such that the relevant circumstances in the one case are the same, or not materially different, in the other.
(3) In this regulation—
(a) "age group" means a group of persons defined by reference to age, whether by reference to a particular age or a range of ages; and
(b) the reference in paragraph (1)(a) to B's age includes B's apparent age."
Reg. 37 provides for the so-called "reverse burden of proof" in terms substantially identical to those familiar from other anti-discrimination legislation.
- In connection with the scope of the power under rule 18 (7) (b), I was referred to Eszias v North Glamorgan NHS Trust [2007] ICR 126 (and the case of E D & F Man Liquid Products Ltd. v Patel [2003] EWCA Civ 472 there referred to) and to Jaffrey v Department of Environment Transport and Regions [2007] IRLR 688. The effect of those authorities was not controversial and I need not attempt to summarise it here. I was also referred to the well-known observations of Lord Steyn in Anyanwu v South Bank Students Union [2001] ICR 391 about the caution to be exercised in using the power to strike out in a discrimination case: see para. 24 (at p. 399). This too was not controversial, but it is fair to note that the force of those observations will inevitably vary depending on the nature of the particular issues; and Lord Hope in the same case made clear that in an appropriate case a claim for discrimination can and should still be struck out if the tribunal can be satisfied that it has no reasonable prospect of success: see para. 39 (at p. 404).
(1) NON-SELECTION
- The unit within ABN AMRO for which the Claimant worked was known as "Structured Financing and Investments" ("SFI"). The equivalent unit within RBS was known as "Financial Structuring Group" ("FSG"). It was inevitable that the merging of the two units would involve redundancies. The procedure followed was that existing post-holders would submit written profiles; that they would then be evaluated by outside consultants; and finally that a decision would be made by the designated head of the merged unit, Tim Pettit. The three roles for which the Claimant was considered were Head of FSG UK, Head of Global Client Origination and Head of FSG European Origination. The successful candidates for those roles were, respectively, Matthew Kellett, Vivian Pereira and Chris Lynch.
- The Claimant originally claimed that his non-selection for all three of the roles was discriminatory on the grounds of his age. At para. 24 of his Grounds of Complaint he said as follows:
"Although well-qualified for the roles which were on offer following the merger, he was not awarded any of the three possible management team roles within the financial structuring group. His belief is that his relatively young age counted against him given demonstrably greater experience in originating transactions and stronger market reputation in successfully leading a team in this particular business line relative to other candidates. The only roles which were comparable with his own [i.e. the three roles in question] were awarded to older employees."
- It then transpired that, contrary to the Claimant's understanding, Mr Lynch was in fact younger than him. It also transpired that Mr Kellett was only nine months older. Mr Pereira was just under seven years older. That led the Claimant to modify his case. In his Further and Better Particulars he withdrew the age discrimination complaint in relation to the job awarded to Mr Lynch, but he maintained it in relation to the other two jobs. In the Particulars he pleads as follows:
"2. The Claimant alleges that his age was a causative factor in his non-selection for the roles of Head of FSG UK and Head of Global Client Origination. This had the consequence that he was made redundant. The Claimant's case is that this was direct discrimination on the grounds of his age in that at a comparative level of seniority older employees were preferred. This is an allegation of direct discrimination contrary to regs. 3 (1) (a) and 7 (2). For the avoidance of doubt it is alleged that the discrimination is causative of the detriment of dismissal.
3. The Claimant notes that both the successful candidates for the post of FSG UK and Head of Global Client Origination were older than the Claimant, albeit that the Claimant accepts that the successful candidate for the post of Head of FSG UK was slightly older than him."
- The Respondents put in a witness statement before the Judge from Mr Pettit denying that the ages of the candidates had anything to do with his decision; but he was not tendered for cross-examination, and the statement by itself would have little weight on a strike-out application of this kind. However, a more cogent point is that it is prima facie implausible to the point of absurdity that an age difference of nine months could make any difference to the question whether the Claimant or Mr Kellett obtained the UK role, and only marginally less implausible that, in the case of the global role, Mr Pettit would be influenced by the fact that the Claimant was 41 or 42 and Mr Pereira 47 or 48. It is and was the Respondents' case that such a difference was incapable of giving rise to a prima facie case of age discrimination in the sense explained in Madarassy v Nomura International Plc [2007] ICR 867. It is, further, their case that that basic point is reinforced by the fact that there are other entirely plausible explanations for the choices made. It is not perhaps surprising that Mr Pettit should say that Mr Kellett and Mr Pereira were chosen over the Claimant because they were genuinely judged to be the better candidates for the jobs in question. But Mr Linden points to passages in a grievance statement put in by the Claimant in which he acknowledges the strengths of the other candidates, while asserting that they were less than his own; and he also points to complaints of unfairness by the Claimant which have nothing to do with age – in particular, that he did not have a proper opportunity to prepare his profile and that Mr Pettit had a bias in favour of ex-RBS candidates (as both Mr Kellett and Mr Pereira were). Thus, not only was there no real indication that age had anything to do with Mr Pettit's choice but there were several other plausible bases on which it could be explained. The Respondents also point out that there is undisputed evidence both that at least one candidate who was younger than the Claimant did get a Managing Director post in the FSG – namely Mr Lynch – and also that there were many older candidates who did not.
- The Judge's reasoning on this point was as follows:
"17 I have considerable doubts about the prospect of this claim succeeding and I have come quite close to striking out the claim of direct discrimination. However, two factors have effectively led me to stop short of this draconian step. The first is that the Claimant seeks to test the explanation advanced by the Respondent and this would include probing the perception issue in relation to his potential youthful appearance, or similar. Mr Reade correctly points out that subtle considerations may have to apply in what he describes as the new world of age discrimination. Second, I am not persuaded that there will be any saving in time, even if this aspect of the claim is struck out. The reason is that in my judgement the Claimant can raise these matters in aid of the unfair dismissal claim. Mr Craig submitted that if the discrimination case were struck out, the tribunal should then restrict cross-examination of the Respondents so that age are could not be asked about. I have considerable misgivings about such an approach and do not consider that it would be correct.
18 I am not prepared to strike out this claim of direct age discrimination but I am more than prepared to express the view that the Claimant has little reasonable prospect of success. The relatively slight age differential, the change in the way in which the Claimant has argued his case and the weakness of the claim in relation to Mr Pereira (concerning whom the Claimant has in the past maintained that his appointment was a personal accommodation) lead me to the conclusion that his prospects are relatively slight. However they are assessed, I consider they fall into the category of "little reasonable prospect of success" and that a deposit order should be made under rule 20. In the absence of any representations concerning means, I consider that the amount of the order should be £500."
- It is clear from that reasoning that the Judge accepted that on the facts as they stood before him – which included all the material documentation, together with background circumstances which were not in dispute – the Claimant had no reasonable chance of proving age discrimination. The reason why he was nevertheless prepared to go no further than saying that the Claimant had "little" reasonable chance was the possibility that more might emerge in the cross-examination of Mr Pettit. Mr Linden submits that that is a wrong approach in principle. He submits that it is not legitimate to allow an apparently hopeless case to proceed to trial in the hope that "something may turn up" during cross-examination: there must be reason to believe that there may be matters which can be put to the relevant witness which might cause him to acknowledge, or the court or tribunal in any event to conclude, that the facts were as the claimant alleges. He refers in this connection to the observations of Lord Hobhouse in Three Rivers District Council v Bank of England (no. 3) [2003] 2 AC 1, at p. 284 A-B. He submits that there was no material of that character in the present case.
- Mr Reade disputes that approach. He says that the prospect that he might be able to make sufficient progress in the cross-examination of Mr Pettit to establish a prima facie case was not mere Micawberism. He says that there are some indications that Mr Pettit may have thought that the Claimant was younger than he really was. He refers to a passage in the note of a meeting which took place in the course of the investigation of the Claimant's grievance. Mr Gibbons (referred to in the note as "JG"), who was conducting the investigation with the assistance of Mr Gilbert from ABN AMRO's HR department (referred to in the note as "IG"), was interviewing Mr Pettit ("TP"). The relevant part of the note reads as follows:
"JG asked if TP had been aware of the age difference between GH and the successful candidates. TP said he had been, although said it was possible to see GH's age from his looks. TP said the successful candidates ranged in age from 38 to 48, and assessed GH's age to be between these two points. TP said one person appointed, Chris Lynch (CL), was in his late thirties. IG asked if TP's assessment of the candidate's ages had been purely on the basis of looking at them. TP confirmed that had been the case with candidates he had not known."
He submits that the Judge was right to allow the selection claim to proceed in order that that possibility could be tested.
- In my judgment the prospect that the Claimant could prove a prima facie case of age discrimination in relation to his non-appointment to either role is indeed fanciful, for the reasons advanced by Mr Linden which I have already set out – and which indeed the Judge largely accepted. So far as the UK job is concerned, where the age difference was only nine months, nothing more need be said. But even as regards the global job there would in my judgment have to be some very particular reason to believe that Mr Pettit was liable to be influenced by the age difference in question. The passage from the note of the investigation meeting relied on by Mr Reade does not in my view afford any such reason. It shows simply that Mr Pettit thought, from his appearance, that the Claimant was somewhere in between 38 and 48. Even if Mr Reade were able to get Mr Pettit to admit that he thought the Claimant was near the bottom of that range, i.e. a year or two younger than he in fact was, that does not make his case more plausible to any appreciable extent. I can see nothing else to indicate even a possibility of age discrimination. The only difficulty which I have felt on this part of the case is whether I am entitled to substitute my own assessment for that of the Judge; but in the end I am satisfied that I am. The absence, as I see it, of any basis for supposing that cross-examination could advance the Claimant's case means that the Judge ought not to have attached any weight to that factor.
- That point being reached, the Judge's other reason – namely that the facts would have had to be gone into anyway – does not really come into play. If the case has indeed no reasonable prospect of success it ought to be struck out. The Judge's point might well have been significant at the prior stage of deciding whether to entertain a strike-out submission at all. Mr Reade submitted that it was questionable whether the devoting of two days to a strike-out application represented sensible case management, when most of the same facts would have had to be considered for the purpose of the unfair dismissal case in any event. I can see some force in that. But there is also force in Mr Linden's response that, since it is the age discrimination claim which allows the Claimant to escape from the effect of the statutory cap on compensation for unfair dismissal, there is an advantage to all the parties in knowing where they stand on that issue at as early a stage as possible: it is undesirable that claims for unfair dismissal be complicated, and their value artificially exaggerated, by age discrimination claims that have no real basis. In any event, that debate is water under the bridge. Once the question whether the Claimant had a reasonably arguable case was before the Judge for decision, the fact that the outcome might not affect the length of the hearing was no longer material.
- I would accordingly allow the appeal as regards this head of the age discrimination claim.
(2) PRO RATA BONUS
- As is typical in the financial services industry, most of the Claimant's remuneration was expected to take the form of discretionary bonus. It was, as is also typical, a term of his written contract that he would not be entitled to bonus in respect of any bonus year (which corresponded to the calendar year) if at the time that the bonus was due to be awarded his contract of employment had been terminated or notice in relation to it had been given. It is, however, common ground that it was the practice at ABN AMRO up to and including 2007 to be prepared, in the case of redundant employees at the Claimant's level, to pay a bonus pro-rated to the number of months served at the date of termination.
- Against that background, the Claimant's case depends on essentially two facts. First, the integration process as between RBS and ABN AMRO was undertaken using what Mr Reade described as a "tiered" approach, by which the most senior posts were considered, and any consequential redundancies effected, as a first stage – mostly in late 2007 or early 2008 – and the less senior posts later. The second fact is that in or around April 2008 there was a change in the approach to the award of pro rata bonuses to those being made redundant. An internal memo dated 2 April 2008, which was disclosed to the Claimant only fairly shortly before the strike-out hearing, reads as follows:
"Following discussions these past three weeks, this note is intended to clarify RBS' position on discretionary bonus in the event of a redundancy situation across RBS and ABN Amro. This note is subject to any specific contractual provisions governing bonus, to legislative requirements in the relevant jurisdiction and to appropriate consultation and discussion with employee representative bodies.
Current Position: RBS
- Employees who leave RBS as a result of redundancy or retirement, will be considered for a pro rated bonus payment up to date of departure;
- Pro rated bonus allocations (if any) should be made based on the standard RBS bonus award principles;
- The bonus award principles that apply are:
- employees are eligible to take part in their Business Unit's Performance Related Discretionary Bonus/Incentive Scheme (the Bonus Scheme);
- the Bonus Scheme rewards performance during the financial year 1 January to 31 December and is based on achievement against a mix of targets, which may include personal, team and business targets.
Current Position: ABN AMRO
Bonus payments within ABN AMRO are discretionary and ABN AMRO employees have no contractual entitlement to a level of bonus or to any bonus.
In generally favourable market conditions in redundancy situations in Global Markets, ABN Amro has previously considered payment of pro rated bonus, with regard to the bonus payment for last year and to current performance.
Recommendation
RBS takes the view that given market conditions, and that the bonus is discretionary, it will only pay bonuses by exception in respect of the populations affected by redundancy. The exceptions are:
- Employees having express written contractual terms entitling him/her to receive a bonus (e.g. a formula-based. bonus);
- Legislative requirements;
- Other exceptional circumstances.
We must ensure that ABN AMRO and RBS employees who remain in employment in the remainder of 2008 and 2009 are not penalised or treated detrimentally as a result of unjustifiable bonuses being paid to redundant staff, with no reference to performance or market conditions."
It is not clear precisely when the recommendations in that memo took effect, but nothing turns on that for present purposes: it is the Claimant's case, which must be accepted at this stage, that the memo did indeed produce a change in policy, essentially requiring proof of "exceptional circumstances" as a condition of entitlement to a pro rata bonus; and that it was the changed policy which was applied in his case. On 18 July 2008 he made representations to the effect that he should receive a pro rata bonus (although acknowledging that it was "a big ask"); but by letter dated 22 July from Mr Nawas, the Global Head of Structured Finance, those representations were rejected on the basis that he could not show any exceptional circumstances.
- The Claimant's claim as initially pleaded appeared to be one of direct discrimination. However, the Further and Better Particulars plead both direct and indirect discrimination. The argument before me focused primarily on indirect discrimination, and it is convenient to deal with that first.
Indirect Discrimination
- The Claimant's broad case is that since the employees made redundant before April 2008 will, as a result of the tiered approach, have been more senior than those made redundant subsequently they will typically also have been older. However, the question is how that can be put as a claim of discrimination within the terms of reg. 3. Para. 20 of the Further and Better Particulars, perhaps significantly, avoids specifically identifying any provision, criterion or practice ("PCP") as required by reg 3 (1) (b). It says simply:
"Because of the tiered approach to redundancy this would have meant that more junior, and therefore probably younger, employees would suffer from the change in approach. If not then directly discriminatory this change in approach is indirectly discriminatory on the grounds of age contrary to reg. 3 (1) (b) and reg. 7 (2)."
- Mr Linden submits that it is in fact impossible to analyse the pleaded facts so as to find any indirect discrimination within the meaning of reg. 3 (1) (b). The only PCP of which the Claimant can complain is the policy introduced on 2 April under which he would not be entitled to a bonus unless he could show exceptional circumstances. It is not suggested, and there is no reason to suppose, that that policy has any different impact depending on the age of those to whom it is applied: it is entirely age-neutral. Nor, he points out, does the Claimant appear to complain of the adoption by the Respondents of the tiered approach to the integration process – no doubt because, even if that could be characterised as a PCP which treated employees in different age groups differently, it was plainly justifiable.
- Mr Reade submits that Mr Linden's case on this point is based on a mischaracterisation of how the Claimant puts his case. In his skeleton argument he repairs the omission in the Further and Better Particulars to identify the PCP complained of and expresses it as follows:
"In the relevant redundancy programme, undertaken as a consequence of the merger of R1 and R2, R1 adopted a policy criterion or practice as to the payment of pro rata bonus under which the criteria for the payment of pro rata bonus varied depending upon whether an individual's redundancy terms were formulated before or after 2 April 2008."
- Essentially the same arguments were run before the Judge. He did not attempt to resolve the issue. After summarising the parties' submissions he said, at para. 21:
"I find myself reluctant to make any adjudication between the two rival submissions, but I am certainly able to conclude that Mr Reade's interpretation of indirect discrimination under these regulations is arguable. In addition, any issues such as this must involve detailed findings of fact. For these reasons, it would not in my judgment be right to contemplate striking out the claim."
- I do not think that the Judge was right to say that resolving the issue between the parties' respective submissions would involve "detailed findings of fact". The proposition advanced by the Respondents is one of pure law. I accept that the fact that a respondent has made a strike-out application of that character does not oblige a tribunal in every case to determine it as a preliminary issue[1], even where it is clear that no disputed question of fact is involved. In some cases to hive off even a self-contained point of law may have no real case-management advantages (and may mean that a point on which the input of lay members would be valuable is heard by judge alone). As I have already noted, Mr Reade submitted that that was the case here, though as I have also noted that may be debatable. But we are where we are. I have heard extensive argument on the issue, and it would be wasteful and unhelpful if I were not to deal with it.
- The rival contentions raise the question of what is the correct analysis where an employer introduces a change in his employment practice, and the workers to whom the earlier practice applied have a different age profile from those dealt with under the new practice. Mr Reade put forward in his skeleton argument a different example of such a situation. At para. 28 he said this:
"The absurdity of the Rs' position can be seen by taking an example. Suppose that a number of jobs are advertised and the queue of candidates is arranged in order of age, oldest first. In the interview process, a selection criterion is adopted that candidates must have at least one GCSE to be appointed. On that basis a number of candidates are selected but half way through the candidates a decision is made to increase the qualification requirement to four GCSEs. Clearly, all the candidates after that point face the same requirement and the Rs would say this cannot be indirect discrimination. If one steps back one can see that those who were older than the age of the candidate in the queue, at the point the decision was made to change the criteria, faced a lower standard to get the job. Those younger than that age clearly were put at a particular disadvantage because they had to meet the higher standard. Thus it can be seen that the Rs' argument distorts the Cl's case to their advantage."
In that example those in the disadvantaged group are potential employees (who are, of course, within the scope of the Regulations). In the present case those in the advantaged group are ex-employees (or at least employees under notice of termination). But it would not be impossible to construct an example where both groups were in employment. It is important however in all such cases to appreciate that the two groups do not exist at the same time. There is no moment at which some employees are treated one way and some another: both before the change-date and after the change-date everyone is treated the same. The difference in treatment complained of is only established by looking from one side of the change-date to the other. This is not, therefore, a case of the kind sometimes encountered where, at a given date, employees A and B may be treated differently because of some temporal criterion such as date of first employment. On the contrary, the difference in treatment complained of may have occurred at widely different times, and it is indeed unclear how far back, or forward, from the change-date it is necessary to go in order to determine the composition of the two groups.
- It is difficult to analyse such a situation in terms of reg. 3 (1) (b). It is artificial and unnatural to describe the change from one substantive PCP to another as itself constituting a policy or criterion. To make the same point another way, what is "applied" to the claimant in such a case is not the change itself but the new substantive policy brought about by the change; and unless that policy is itself discriminatory reg. 3 is not engaged. I do not think that this difficulty can be got around by relying on the word "practice" as opposed to "policy" or "criterion": no doubt "practice" is a wider word, which has the effect of extending the scope of the definition of indirect discrimination, but it is nevertheless of the same general character as "policy" and "criterion", and the points made above seem to me to apply equally. Likewise, I do not see how the mere existence of a state of affairs under which a group to which the claimant belongs is disadvantaged compared to a different group can be described as the "application" of a PCP: it may be the result of the application of a PCP, but that is another matter. Another way of putting the point would be to say that the fact that different practices applied at the relevant times is a material difference in the circumstances of the two groups.
- Thus far I accept the Respondents' case that the situation does not fall within reg. 3 (1) (b). But in the course of oral argument I raised the question whether the Claimant's case could be characterised – albeit that it was not put this way in Mr Reade's skeleton argument – as indirect discrimination of the Enderby type. The decision of the European Court of Justice in Enderby v Frenchay Health Authority [1994] ICR 112 is too well-known to require any elaborate summary here. What the Court decided in that case was that indirect discrimination may be established, subject to objective justification, where two groups of employees who are treated differently appear, from "significant statistics", to have a substantially different gender composition[2]; and, specifically, that it is not necessary in such a case to identify a "particular kind of arrangement" on the part of the employer which leads to that result. That reasoning is not, on the face of it, easy to reconcile with the requirement of the Framework Directive, as reproduced in the Regulations, defining indirect discrimination in terms of the application of a PCP. But in Villalba v Merrill Lynch & Co. Inc. [2007] ICR 469 this Tribunal, Elias P presiding, analysed the reasoning in Enderby as resting on a presumption – where the conditions specified by the Court are satisfied – that a discriminatory PCP is operating, or has operated in the past, to produce the state of affairs complained of, notwithstanding that none has been specifically identified: as Elias P put it at para. 113 (p. 506 A-B), "there must somewhere have been some element of indirect discrimination". Subject to an immaterial qualification, I respectfully adopt that analysis.[3] The question then is whether the Claimant can rely on an Enderby analysis on the facts of the present case. On reflection, I do not see how he can. The state of affairs of which he complains is demonstrably the result of the intersection of two practices on the part of the Respondents – that is, "tiering" and the requirement of exceptional circumstances introduced by the memo of 2 April – neither of which is said to be unlawfully discriminatory.[4] That being so, there is no room for a presumption of the kind which, on Elias P's analysis, is the basis of Enderby-type discrimination: how the situation complained of came about is apparent for all to see, and there is no reason to seek for submerged historic discrimination.
- This analysis does not seem to me to lead to an intuitively wrong result. I see no reason why the law should be concerned with differences of age profile between "pre-change" and "post-change" groups of employees, where the change in question is not directly discriminatory and where the practices which led to the employees receiving the relevant treatment before or after the change in question are not indirectly discriminatory. In Mr Reade's example quoted above the candidates affected by the raising of the qualifications might have a good claim of age discrimination; but it would have to be on the basis that the practice of dealing with candidates in order of age was unjustifiable. As I have already observed, no such argument was, or could have been, advanced here. The fact that in the present case the advantaged group were no longer employed (or, at least, were under notice) at the time that the disadvantaged group came into being illustrates, though it is not essential to the argument, that we are not dealing with employees in whose cases the material circumstances are the same.
- It follows that I should strike out this head of claim. I do so with the more confidence because even I were wrong on the question of prima facie discrimination it seem to me highly likely – albeit that I am not in a position formally to decide – that the Respondents would in any event be able to justify the introduction of the change made in 2008. The fact that those made redundant before the change were, because more senior, also likely on average to be older than those made redundant after it does not seem to me the kind of discriminatory impact which would weigh heavily in the balance against the business considerations which evidently led to the stricter approach to pro rata bonus.
Direct Discrimination
- The Claimant's case of direct discrimination is pleaded in the Further and Better Particulars as follows:
"17. The Claimant notes from the replies to the questionnaire and the further replies that all of the employees, at the same level or more senior to the Claimant, who were made redundant by the First Respondent in the period 1st January 2008 and 18th September 2008, and who received a bonus or a pro rata bonus, were, with the exception of one employee who appears to have had a guaranteed bonus, older than the claimant.
18. It can properly be inferred from this that age was a causative factor in the decision whether to pay bonus or pro rata bonus in the case of redundancy such that, absent an explanation from the First and Second Respondents, Direct discrimination may be inferred contrary to reg 3(1)(a) and reg 7(2)."
- By the time of the hearing before the Judge the Respondents had also produced a printout showing details of all Managing Directors made redundant from 15 December 2006 to 21 August 2008, including their ages and length of service: this was essentially the information given in "the questionnaire and further replies" referred to in the pleading, but with rather more detail. From it it appears that out of 21 made redundant after 2 April 2008 only four received a pro rata bonus. Of these, three were indeed older than the Claimant: the fourth was aged 41. That broadly reflects the distribution of ages in the group generally. Two were aged 37, three 41 and one 42: the remaining 15 were all older than the Claimant. Plainly no age-related pattern can be discerned from those figures.
- The Employment Judge dealt with the issue of direct discrimination at para. 22 of the Reasons, as follows:
"A claim of direct age discrimination is also made under this head and the Claimant points to the fact that all bar one of those receiving the bonus were older than he was. At this point, an argument between the parties surfaces in relation to the burden of proof in discrimination cases. Mr Craig submits that a mere difference in treatment and a difference in age are not sufficient, according to case law, to transfer the burden of proof. The short answer to this contention is that I am unable to judge at this stage whether or not this will be the conclusion to which the tribunal must come after hearing all the evidence. I agree with Mr Reade QC that there are many imponderables at this stage on the facts, notably the precise make up, ages, service length and do forth in the comparator group. I also note a sharp contest on the facts as to whether accrued income from previous years' transactions was relevant for the calculation of the bonus. This goes to the question of whether or not there were exceptional circumstances for payment in any event and I cannot exclude the possibility that this will have some bearing on the overall factual dispute concerning age discrimination. Such are the uncertainties that it would be wrong to strike out the claim at this point."
- I am not clear what the significance is of the "imponderables" to which the Judge refers or about the difficulty about the treatment of accrued income. These were not specifically relied on by Mr Reade in his skeleton argument, which in fact focused wholly on the indirect discrimination claim, or in his oral submissions. The essence of his submissions on direct discrimination was that the Claimant was dependent on materials supplied by the Respondents, and that while on face of the Respondents' more detailed figures and the memo of 2 April it might seem that he could only succeed on a claim of indirect discrimination, it might yet transpire that those figures were unreliable: he pointed to what he said were at least potential inconsistencies between those figures and the reply to the questionnaire.
- It is important when focusing on figures in circumstances like these not to lose sight of what it is that they are said to demonstrate. The Claimant's case of direct discrimination is, necessarily, that the relevant decision-maker – I am told that it was Mr Nawas – was influenced, consciously or subconsciously, in his decision about who should receive pro rata bonus by the ages of the employees in question. That is prima facie implausible. In some situations – typically, although certainly not invariably, in the case of employees who are exceptionally old or exceptionally young – a difference of age may well be a plausible explanation of an otherwise unexplained difference of treatment; but that is not so in every situation, and it does not seem to me to be so here. I asked Mr Reade what kind of prejudice might be operating that would incline Mr Nawas to award pro rata bonuses more readily to older employees. He suggested that he might have been influenced by the perception that older employees would find it more difficult to obtain alternative employment than younger employees. I am bound to say that I find that pretty implausible too. It would in my view in the circumstances of this case require a very clear and strong trend in the figures to raise a prima facie case of discrimination such as to reverse the burden of proof. Thus even if there are minor discrepancies between the Respondents' figures and the answers to the questionnaire, and even acknowledging that there may be some imponderables of the kind referred to by the Judge, the broad picture presented by the figures admits of no real possibility of age being a factor in the decisions under challenge. As regards the prejudice which Mr Reade suggested might be operating, it is striking that, of the six individuals in the 21 who are over 50 and thus closest to retirement age, none received bonus.
- With respect to the Judge, therefore, I cannot accept his conclusion that the claim of direct discrimination is arguable. In my judgment it should be struck out.
(3) ENHANCED REDUNDANCY PAYMENT
- The circumstances giving rise to this claim are as follows. The Respondents offered a redundancy payment scheme for employees at the Claimant's level under which, in addition to pay in lieu of notice, they received a payment consisting of nine months' pay plus, for each full year of service over nine years, a further one month's pay. Another way of putting that would be to say that a redundant employee would be entitled to receive one month's pay for each year of employment, but with a minimum award of nine months' pay. The Claimant had twelve years' length of service and accordingly received a redundancy payment of twelve months (together with three months' pay in lieu of notice).
- The Claimant's original pleading misunderstood the basis on which the scheme worked, and his claim was wholly reformulated in the Further and Better Particulars. In principle, therefore, it should be possible simply to ignore it. But it is necessary for the purpose of understanding the Respondents' submissions to understand that the Claimant's original complaint was that, since all relevant employees got nine months' pay anyway, the longer service of those employed for more than nine years was inadequately recognised and that the resulting state of affairs was discriminatory against older employees such as himself.
- As pleaded in the Further and Better Particulars the Claimant's claim can be analysed as follows:
(1) At para. 9 the Claimant pleads:
"As an enhanced redundancy payment policy with a length of service element it is inherently indirectly discriminatory on the grounds of age in that younger employees are unable to achieve the same length of service as older employees."
In other words, the Claimant's complaint is of discrimination against younger employees. Mr Reade in his skeleton argument emphasises that that is at the heart of the case.
(2) At para. 10 the point is made that the Respondents cannot take advantage of the provision of reg. 33 of the Regulations, the effect of which is that contractual enhanced redundancy payment schemes are not rendered unlawful by Part 2 provided that they mirror the provision of the statutory redundancy scheme: ABN AMRO's scheme did not do so.
(3) At paras. 11 and 12 the Claimant pleads that it follows from the foregoing that the burden of proof is on the Respondents to justify the policy. Without prejudice to that contention, certain particular arguments are advanced in para. 12 as to why the provisions in the scheme are unjustifiable. I need not summarise those arguments, but I should note that one of them – at (c) – is that, since the scheme is calculated by reference only to basic salary and not bonus, it is relatively less generous to more senior (and thus typically older) employees, a greater proportion of whose remuneration is likely to be in the form of bonus. The Respondents attach significance to that argument as illustrating that the Claimant is continuing, as he did in his original claim, to advance an argument based on discrimination against older employees. However, it is clear that the point in question is relied on only as a weapon with which to attack the justifiability of the scheme. Mr Reade submits that it does not matter whether the grounds on which he challenges the justifiability of the scheme correspond wholly to the grounds on which he claims that it discriminates against him: if he shows the scheme to be unjustifiable on any basis, that "unlocks the door".
(4) At para. 13 he pleads as follows:
"It should further be noted that in terms of remedy the Claimants case, which is advanced in the alternative to his primary case that his redundancy was an act of discrimination, is that he is entitled to retain the favourable parts of the existing policy buts also entitled to seek the further elements in order place him in the position he ought to have been, had an indirectly discriminatory policy not been adopted. Thus the Claimant will seek an additional 9 months, reflecting the disregarded service by reason of his role, and that the payment be made on the basis of total average monthly earnings including bonus."
In other words, he claims a redundancy payment of 21 months' pay, being the nine months' floor" plus one month for each year of service.
- Mr Linden's case, as developed in his skeleton argument, depends on a contention (see para. 67) that:
"On a proper analysis, the Claimant's complaint is not that he (and people of the same age group as him) are at a disadvantage compared to older people. In fact, what he says was the older age group enjoyed the same advantage as him i.e.: that their length of service beyond 9 years was rewarded proportionately to their length of service. Ironically, his true complaint remains that all employees automatically got 9 months' pay regardless of length service, which was if anything to the advantage of his age group. He says, in effect, that he is not at a sufficient advantage compared to younger people given his length of service. That does not found a claim for indirect discrimination."
On that basis he advances a number of arguments why such a claim is manifestly ill-founded.[5]
- The Judge, at paras. 23 and 24 of the Reasons, reviewed the rival contentions but concluded simply that he was unable to say that the Claimant had no reasonable prospect of success. As in the case of head (2), I doubt whether it was right for him not to deal with the issue, provided always that he felt that no questions of disputed facts were involved. In any event I think I should do so. In my view Mr Linden's difficulty is that his argument depends on characterising the Claimants' case as something which it avowedly is not. The case pleaded in the Further and Better Particulars is, as set out at para. 39 (1) above, a conventional case advanced on the basis that a length of service criterion discriminates against younger workers.[6] What Mr Linden says is that the arguments advanced at paras. 12 (c) and 13 of the Further and Better Particulars are inconsistent with that primary case. That may or may not be correct, but if it is it would not be a reason for striking out the claim: it would only demolish particular aspects of the Claimant's argument, and it would remain for the Respondents to prove justification. They may well be able to do so, but it was not part of Mr Linden's submission that I could decide that issue at this stage. I decline therefore to strike out this element of the case.
- That being so, it is unnecessary that I should give a decision on Mr Reade's submission, summarised at para. 39 (3) above, that in the context of a claim that the Claimant had been discriminated against as a younger man he could rely (on the issue of justification) on a contention that the scheme discriminates against older men. For reasons which were not necessarily the fault of counsel, the point was not very fully developed before me. Nevertheless, I am prepared to express a provisional view in case it is of assistance to the Tribunal, although as a matter of prudence it might make sense for it to reach any decision on this point on alternative bases. As a matter of principle, it seems to me that what has to be justified is the feature of the scheme which is complained of as impacting on the Claimant – i.e., here, the bias in favour of older employees which follows from the weighting given to longer service. If that feature can be justified, I do not see why the fact that the scheme has other features which may discriminate against other age groups is material. Of course if the justification tendered by the Respondents itself involves reliance on those other features (it is not uncommonly argued that the justifiability of a disputed element in a scheme must be assessed in the context of the scheme as a whole) the fact that those features are themselves discriminatory may become relevant by that route; but that is a different point.
(4) COMPROMISE AGREEMENT
- Although I have referred above to the Claimant being "entitled" to an enhanced redundancy payment of, in his case, twelve months' pay (together with three months' pay in lieu of notice), that entitlement was, as is very common, made conditional on his signing a compromise agreement in accordance with s. 203 (2) (f) of the Employment Rights Act 1996. It is the Claimant's case that insofar as he was bringing a claim based on belonging to a particular age group, that requirement was indirectly discriminatory. As pleaded at para. 23 of the Further and Better Particulars:
"The requirement … that the Claimant compromises any age discrimination claims as a condition of the offered redundancy payment placed employees of the Claimant's age and seniority, and in particular the Claimant, at a disadvantage as they would be unable to assert the discriminatory nature of the payments made to them and would, as the Claimant has been, be deprived of any enhanced redundancy payment if they asserted age discrimination and therefore could not sign the compromise agreement."
The Claimant contends that such a requirement cannot be justified, because it was unnecessary for the Respondents to link receipt of the payment, which reflected the value of his past service to ABN AMRO, to settlement of a claim in respect of a wholly different matter.
- The Judge's reasoning on this point was as follows:
"In my judgement, a provision, criterion or practice as to the compromise agreement does not place persons of the same age group as the Claimant at a particular disadvantage when compared with others. This is because, if the enhanced scheme is inherently indirectly discriminatory, then all concerned have a potential claim and there would be no particular disadvantage to the Claimant. In any event, even if there was some sort of prima facie case, the case on justification would be bound to succeed. There is a strong public policy in encouraging parties to settle cases. The safeguards in a compromise agreement within this jurisdiction include the taking of legal advice. If a settlement is rejected and the employee seeks to litigate, it is almost bound to be the case that the payment envisaged in the settlement will not be made. There is no decided case in which this has been characterised as indirect discrimination and, further, I consider that the argument would be bound to fail. Accordingly, I am prepared to strike out this claim."
- I agree with the Judge in both respects. I too cannot see that the practice of offering an enhanced "redundancy payment" in return for an agreement not to pursue other claims puts people in any given age group at "a particular disadvantage" (any more than it does persons in any other protected category): it affects all dismissed employees in the same way. Further, it seems to me, as it did to him, that even if a case of discriminatory impact could be made out the requirement could plainly be justified. Employers have a legitimate interest in achieving finality as regards all issues arising out of the dismissal of an employee. Offering a further payment to achieve a binding compromise of all such issues is plainly a proportionate means of achieving that aim. Its proportionality is unassailable because the choice always remains with the employee: if he thinks it is a bad deal he need not take the offer. He will of course, by definition, have access to legal advice. The fallacy in the Claimant's case is that it overlooks the fact that he otherwise has no right to this payment: although it may be described as an enhanced redundancy payment, it is in fact a payment offered to redundant employees in return for a full and final settlement of all claims. It is of course for that reason that the contention that the payment could be made while excepting the right to advance outstanding claims makes no sense.
- I accordingly dismiss the cross-appeal.
