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HM Land Registry v. Benson & Ors


10 February 2013

An employer had been entitled to apply a "cheapness criterion" when deciding which employees should be able to take advantage of an early retirement scheme, as reducing headcount was a legitimate aim and the cheapness criterion was a proportionate and practical means of achieving that aim.
The appellant Land Registry (L) appealed against an employment tribunal's decision upholding age discrimination claims made by five employees (B) and a claim of indirect sex discrimination by a further employee (M).

L had offered its employees early retirement and voluntary redundancy with the aim of reducing headcount within an approved budget. Due to a high number of applicants L used a selection process which included a "cheapness criterion", and, with a few exceptions, selected those whose entitlements under the scheme would be the lowest. B were all aged between 50 and 54. Their applications for early retirement were refused on the grounds of cost. The employment tribunal held that L's aim was legitimate and it had been necessary to carry out a selection exercise as a result of oversubscription; however, L could have afforded to release everyone who applied and, therefore, the selection criterion was not justifiable because it was not a proportionate means of achieving the legitimate aim. M had applied for voluntary redundancy but was excluded because she was on a career break. She argued that had she been informed that employees in her position would be excluded, she would have given notice to return to work within the relevant period. The tribunal concluded that the way in which the criterion was adopted was not fair in that it did not allow employees on a career break to advance their return. The issue for the Employment Appeal Tribunal was whether the criteria adopted by L were justifiable.

HELD: (1) It was legitimate for a body such as L, like any business, to seek to break even year-on-year and to make redundancies in order to help it do so where necessary. It was also legitimate for L to impose a budget on the amount to be spent on voluntary redundancy/early retirement schemes, even if that might mean that selection had to be made between applicants. The question was whether the adoption of the cheapness criterion was a proportionate means of selection in order to meet the budgetary limit. In respect of B's claims the tribunal had not carried out the essential balancing exercise defined in MacCulloch v Imperial Chemical Industries Plc [2008] I.C.R. 1334 and therefore its decision could not stand, MacCulloch applied. While the cheapness criterion was not the only means of achieving L's aim, it was the only practicable one and it was hard to escape the conclusion that its use was justifiable. The essence of the tribunal's reasoning was that L had not demonstrated a "real need" to limit its spending on the scheme as its reserves far exceeded the amount required. To apply a test of unaffordability in that sense was to fall into the error of treating the language of "real need" as connoting a requirement of absolute necessity, Barry v Midland Bank Plc [1998] 1 All E.R. 805 and Chief Constable of West Midlands v Blackburn [2008] I.C.R. 505 considered. The task of the employment tribunal was to accept L's legitimate decision as to the allocation of resources as representing a genuine "need" but to balance it against the impact complained of. If the tribunal had carried out that exercise it would inevitably have concluded that the cheapness criterion was justifiable. The approved budget had been for a particular project which was not directly discriminatory, but which required a selection exercise, which could only be practicably done on a basis involving some indirect age discrimination. B's claims should therefore have been dismissed (see paras 34-40 of judgment). (2) The finding that L's application of the voluntary redundancy criteria was unfair, because it did not allow employees on career breaks the chance to advance their return, meant that the application of the criterion to M could not be proportionate or relied on by way of justification. M's claim of sex discrimination was upheld (para.51).

Appeal allowed in part.

Counsel for the first to fifth respondents: Stuart Brittenden.

[2012] I.C.R. 627; [2012] I.R.L.R. 373

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