Redundancy compensation linked to pension entitlement challenged on age grounds

Under a civil service voluntary exit scheme, employees aged 60 or over (and therefore eligible to draw a full pension under the pension scheme) had their severance compensation capped at six months’ pay. Employees under the age of 60 were not subject to the same cap.

The tribunal hearing in Smith v Department of Business & Skills was to decide a preliminary point of whether there was a material difference between the claimants’ circumstances and those of their comparators. The tribunal decided that they were in materially different circumstances, essentially because they were entitled to an unreduced pension, so they could not bring their age discrimination claim.

The Employment Appeal Tribunal allowed the appeal. They did not accept the argument that the key to the payment of increased compensation was not age, but liability to reduction in pension…

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