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Voluntary redundancy and discrimination

Napthens - February 16th 2012

adly redundancy programmes across all sectors appears likely for 2012.

A voluntary redundancy process seems a straightforward and less contentious way to achieve a reduction in headcount. However a recent case has identified some of the difficulties which can result from a voluntary redundancy programme.

HM Land Registry went through a large redundancy programme and allocated a budget of £12m to the project. 

In order to reduce headcount and avoid compulsory redundancies, the Land Registry set up a voluntary redundancy/early retirement scheme with enhanced benefits. More applications were received than needed and so it developed a selection process which gave priority to those that would cost the least to make redundant/retire under the scheme and within the budget.

Those in the age group 50-54 were the most expensive to make redundant under the scheme due to their specific pension benefits. As such the criterion had a disparate impact on this age group and 5 employees from this group pursued a claim for indirect age discrimination after their applications for voluntary redundancy were turned down.

The employees’ won at first instance but that decision was overturned by the EAT who held that the budget of £12m allocated from the employers resources was a legitimate aim and that had to be balanced against the impact complained of – here the criterion was held to be proportionate.

However a female employee who was on a career break and was refused voluntary redundancy on the basis it gave no cost saving to the Land Registry was successful in persuading the EAT that the criterion in this instance was indirectly discriminatory against women. Although the EAT recognised the criteria could be justified on budget grounds here, the Land Registry lost because they had failed to notify the employee of the criterion and so deprived her the chance to give notice to return to work and take advantage of the scheme.

This case provides a useful reminder to businesses to consider carefully the criteria which will be applied in a voluntary redundancy programme and how that applies to all staff, including those absent from work for various reasons. The facts relating to the female on a career break could quite easily apply to an employee off on long term sick with a disability where an employer maybe exposed to a variety of different disability discrimination claims.

Legal advice should be taken when implementing a redundancy programme, voluntary or compulsory. Sometimes even the most straight forward matters become complex and result in litigation.