Ms J Elliot v The Parliamentary and Health Service Ombudsman — 2019

Ms J Elliot’s employment ended on 30 November 2017 under a voluntary exit arrangement operated through the Civil Service Compensation Scheme. She was 64 years old, had 15.33 years’ service, and because she was over 60 and entitled to draw her civil service pension, the scheme’s Pension Age Cap limited her VE payment to six months’ pay, £21,375.50, instead of the uncapped Standard Tariff amount of £54,629.37. The tribunal found that this was less favourable treatment because of age, and the respondent accepted that age was the reason for the different treatment.

The respondent’s stated aim was to provide a proportionate financial cushion to employees who lose their jobs, on the basis that there is less need for that cushion where an employee can draw a pension while looking for work. The tribunal accepted that this was the respondent’s real aim and held that it was a legitimate aim. It rejected the claimant’s argument that the cap was implemented only for cost-cutting purposes, and it also accepted that the respondent had a margin of discretion in framing the scheme.

The claim nevertheless succeeded because the tribunal held that the Pension Age Cap was not a proportionate means of achieving that aim. It found that the respondent had not properly considered the impact on older employees who still needed to work for financial reasons, including people with housing costs, caring responsibilities, or adult children living at home. The tribunal accepted the claimant’s evidence that, at 64, her prospects of obtaining replacement employment were small, and it found that the cap caused her a significant financial loss compared with her planned position.

In the proportionality analysis, the tribunal rejected the respondent’s comparator approach that required a hypothetical 50-year-old to buy out an actuarial reduction to match the claimant’s pension position. It treated more realistic comparators, including employees nearer pension age, as more relevant. The tribunal also rejected the respondent’s contention that equalising the VE payment would itself be discriminatory against younger employees. It found there was no formal union agreement to the Pension Age Cap in this redundancy exercise, and it concluded that the discriminatory effect of the cap far outweighed its justification. Remedy was not decided in this judgment; the tribunal directed that a separate one-day remedy hearing be listed.