Case of the week: ABN Amro Management Services & RBS v Mr G Hogben

Evidence showed employer did not practise age discrimination

ABN Amro Management Services Ltd & The Royal Bank of Scotland v Mr G Hogben (UKEAT/0266/09/DM)

Facts

Grant Hogben was an employee of ABN Amro Management Services Ltd, which was the subject of a takeover by the Royal Bank of Scotland (RBS). His last post was head of structured funding and investments, in London. A redundancy procedure was instigated as part of the resulting restructure, during which Hogben was considered for three alternative roles within the business. He was unsuccessful and subsequently made redundant in August 2008.

Under an earlier policy, departing employees received discretionary pro-rata bonus payments. However, before Hogben was dismissed, the policy was changed so that such payments were only made in exceptional circumstances and he did not receive one. Hogben brought a tribunal claim on the grounds of unfair dismissal and age discrimination.

ABN and RBS appealed to the Employment Appeal Tribunal (EAT) following only partial success in their application to the tribunal to have the age discrimination elements of Hogben’s claim struck out.

Decision

Hogben claimed that the change from one policy to another was indirectly discriminatory. Due to the timing of the redundancies, it was argued that senior employees, who tended to form an older age group, had benefited from the original policy. They were more likely to have received a pro-rata bonus as they were made redundant before the change. Less senior (and it was argued younger) employees, such as Hogben, were dismissed after the change was implemented and were, therefore, put at a disadvantage. As a group, it was argued, they were less likely to receive a discretionary bonus payment than the older age group because of the change in policy.

The EAT decided that this did not amount to indirect discrimination. Although the respective policies were each a “provision, criteria or practice” (PCP) covered by age discrimination legislation, the change from one policy to another was not itself a PCP. The policies needed to apply to the claimant and the comparator group at the same time. The change could not, therefore, amount to indirect discrimination. The policies themselves were age neutral, thereby giving no other basis for a discrimination claim.

The EAT confirmed that the tribunal had been right to strike out a claim that receiving an enhanced termination payment in return for waiving the right to bring an age discrimination claim amounted to indirect age discrimination.

The practice of entering into compromise agreements did not place persons in the claimant’s age group at a disadvantage when compared with other persons in other age groups, as everyone would be equally affected. Even if it had been discriminatory, the EAT felt this would have been justified because of the legitimate public interest in settling claims, the fact that such agreements are a proportionate means of achieving this aim and the safeguard of independent legal advice required for such agreements.

The EAT also decided that it was implausible for Hogben to argue that he had not been offered an alternative role on the grounds of age. Not only was one successful candidate just nine months older than him and the oldest seven years older, there were also plausible reasons behind their appointments.

Implications

Employers should be encouraged by the decision that a policy change is unlikely to be grounds for an indirect discrimination claim by employees disgruntled with the change, even if it impacts on a certain age group. Of course, the need still remains for any contractual changes to be brought in using a fair procedure and for related risks to be considered and managed. It is a logical ruling that employers can continue to settle claims under compromise agreements without fear of such arrangements giving rise to the very claims that the employer might be paying to avoid.

Finally, it is encouraging that employees must be able to adduce some evidence of discrimination to bring such a claim and that employers may be able to have claims struck out if there is no evidence and they can show there were plausible reasons behind any decisions made.

Frances Strickle, associate, Thomas Eggar

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