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Can changing employees' terms and conditions amount to indirect age discrimination?

24 February 2015 #Employment

The Employment Appeal Tribunal (“EAT”) has recently held that varying employees’ contractual terms and conditions may amount to indirect age discrimination where those changes disadvantage older workers (Braithwaite and others v HCL Insurance BPO Services Ltd UKEAT/0152/14).  In the Braithwaite case however, the EAT found that the changes made to employees’ contracts could be objectively justified as there were no less discriminatory ways of achieving the employer’s legitimate aim of reducing staffing costs.

The facts of the Braithwaite case concern a TUPE transfer. Following the transfer, Mrs Braithwaite became an employee of HCL Insurance BPO Services Ltd (“HCL”). The transfer resulted in HCL effectively having a two-tiered workforce, with its existing staff and the staff that had transferred each having different terms and conditions. HCL suffered financial losses following the transfer and sought to harmonise all employees’ terms and conditions in an attempt to reduce staffing costs. It sought to make the following changes to the transferring employees’ terms and conditions:

  • Removal of benefits including private health insurance and enhanced redundancy payments;
  • An increase in working hours; and
  • A reduction in annual leave entitlement.

The changes put Mrs Braithwaite and others (“the Claimants”) at a particular disadvantage because as they were older workers, they had accrued greater entitlements as a result of their longer service. HCL informed the Claimants that unless they signed up to the new terms and conditions they would be dismissed. The Claimants refused and were subsequently dismissed.

Both parties appealed to the EAT on a number of issues, the Claimants appealed on the basis that HCL’s requirement to sign up to new contractual terms and conditions could not be objectively justified. In response to that issue, the EAT carried out a balancing exercise by firstly looking at the effect the changes had on the Claimants. The EAT recognised that the Claimants were put at a particular disadvantage as they were to lose certain benefits, suffer longer working hours and receive less annual leave. The EAT also looked at HCL’s business reasons for introducing the changes and found that the changes could be objectively justified. In reaching this decision, the EAT was influenced by the fact that HCL had to reduce staff costs in order to ensure the future viability of the business and to have in place market-competititve, non-discriminatory terms and conditions. The EAT found that HCL’s actions were a proportionate means of achieving a legitimate aim and therefore, did not amount to indirect discrimination.

This case acts as a warning to employers seeking to introduce new terms of employment. Employers will need to assess the effect the changes have on certain employees as they may have a discriminatory impact. Employers will however, find comfort in the EAT’s judgment which carried out an assessment of whether less discriminatory options were available to the employer. In some circumstances, there may be no other alternatives available to the employer and any action taken may be objectively justifiable.   


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