Older Workers Entitled to Bigger Redundancy Payments

Employers are entitled to offer older workers bigger redundancy packages than their younger colleagues even if the duration of their service is identical. Rejecting a direct age discrimination claim brought by a civil servant, the Employment Appeal Tribunal recently ruled that the different treatment of older and younger workers was justified by the greater difficulty the former often endure in finding alternative employment.

A 26-year-old former employee of the Department of Work and Pensions had received a voluntary redundancy payment of £10,849 under the Civil Service Compensation Scheme. There was no dispute that, had she been aged over 35, she would have received an additional payment of £17,690 and the employee argued that this treatment amounted to age discrimination.

Dismissing those arguments, however, the EAT ruled that older and younger workers were in the circumstances ‘not truly comparable’. The purpose of the different payments was to reflect the comparative difficulties loss of employment posed to older employees in terms of finding another job and family financial commitments. The difference in treatment was a proportionate means of achieving the legitimate aim of producing a proportionate financial cushion for older workers.

Shaun Underhill, a Partner at Shentons Solicitors, comments “The situation described in this case reflects a typical pattern of redundancy payments, with older employees being entitled to more than their younger colleagues. Employers can be reassured that they will not be guilty of age discrimination if they continue to award redundancy payments in this manner”.