Are we allowed to prevent employees under the age of 55 from seeking early retirement in a redundancy situation?
We are currently going through the process of significantly reducing the headcount of the organisation. We have made a number of employees redundant. In addition, we decided to offer early retirement to employees.
Initially we offered early retirement to employees aged 50 years and over. We did not think that the option of early retirement would be very popular, and hence we offered quite a low starting age. However, we were wrong! We have been overwhelmed with applications. Hence, we have now said that we will not be considering applications from anyone aged under 55 years. One employee (who is aged 53 years) has argued that this is age discrimination. It could certainly be argued that we are treating people differently due to their age, but we also have to think about managing the process. Can we justify our actions?
You are correct that this could seem to be a case of age discrimination under the Equality Act 2010. However, it is important to note the Employment Appeals Tribunal ruling in HM Land Registry v Benson and others . In this case a significant number of employees volunteered for early retirement, more than could be accommodated within the budget. It was decided, therefore, to exclude those in the 50-54 age bracket from early retirement. The employees argued that this was age discrimination.
However, the EAT ruled that keeping within the budget was a legitimate aim and that restricting the age range for early retirement claims was a proportionate means of achieving the legitimate aim. On that basis, this was not age discrimination.
Just as a further point - in this case the employer also decided not to inform those who were on a career break about the voluntary scheme. This mainly affected women, and hence there was a claim that this approach was indirect sex discrimination. This claim was upheld.