Cutting your cloth – justifying indirect discrimination
There has been a lengthy debate in the courts about the extent to which an employer can rely on cost considerations when seeking to justify a provision, criteria or practice that is potentially indirectly discriminatory. In Heskett v Ministry of Justice, the Court of Appeal found that cost is a relevant factor, provided that the employer is not acting solely to avoid increased costs.
Mr Heskett was a probation officer. His salary increased each year as he progressed up the pay scale. In 2011, public sector pay constraints caused his employer significantly to extend the time it took an employee to reach the top of their pay band. This disproportionately affected younger employees, who were less likely to have reached or progressed towards the top of the pay scale than older employees. Mr Heskett claimed indirect age discrimination, which the employer defended on the basis that the reduction in the rate of pay progression was objectively justified because of the significant reduction in public money available. The objective justification defence succeeded in the employment tribunal and the EAT.
The question for the Court of Appeal was whether the employer was improperly relying on cost to justify the discriminatory effects of the policy. A series of CJEU and domestic cases have found that an employer cannot rely on cost alone to justify indirect discrimination but can do so as an element in justification which involves other factors. This is often referred to as the “costs plus” principle, although the Court of Appeal is distinctly unenthusiastic about the use of that phrase.
According to the Court of Appeal, the relevant authorities establish that an employer cannot justify potentially discriminatory treatment if its legitimate aim is no more than a wish to save costs. However, tribunals should look at the overall picture when deciding how the employer’s aim can most fairly be categorised. It is only if it is solely to avoid increased costs that the aim has to be treated as illegitimate.
In principle, it is possible for an employer’s need to reduce staff costs in order to balance its books to be a legitimate aim. The tribunal’s focus would then shift to whether the measures the employer wants to implement to achieve that aim are proportionate. This requires a tribunal to consider carefully both the nature and extent of the financial pressure under which the employer was operating and whether that pressure could have been addressed in a way that did not have the discriminatory effect complained of.
In this case the tribunal decided that the employer was not relying on cost alone to justify its actions. It was relying on an “absence of means”, which was not the same thing. The need to live within its means was a legitimate aim. In the circumstances the tribunal found that the new pay policy was designed to share the pain of the constraints as fairly and equitably as possible and was a proportionate short-term response to the financial stringency, although the employer recognised that it would need to take steps to eliminate such a lengthy pay progression period “in the near future”. The tribunal was entitled to reach that decision.
Extended job retention scheme – yet more guidance
On 10 November the government released further guidance about the operation of the extended job retention scheme. You can find a summary of the new rules here.
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