Age/part time worker descrimination ?

I have a friend who continued to work part time for the same company after his pension age" so is currently in receipt of his pension and a part time salary.
He has been offered an enhanced redundacy payment (as is the norm in the company ) - although there is no contractual enhanced redundancy scheme.
The formula used for calculating enhanced redundancy pay, essentially deducts his pension from the calculated amount. As his pension is based on his fulltime salary and the calculated amount on his part time salary, the formula (undisclosed but widely known ) they use effectively means that he owes them money.
{the formula is designed to prevent employees approaching pension age receiving a windfall- but appears not been changed following the 2006 age descrimination legislation, to cater for people working beyond pension age}
As gesture they have him offered a arbitrary amount - still above statutary pay
but much less than he would have receive if the formula had calculated the amount based on his fulltime pay and then prorated it on the basis of his part time work.

Any thoughts welcome on whether this breaks any laws on either age discrimination or discrimination against part time workers - as his payout will essentially be calculated on a different basis from others who are being made redundant. (Actually there is no calculation -just a finger in the air)
Although maybe that's OK as there is no contractual enhanced scheme

So he is still employed by this company but is also receiving his pension at the same time? I'm also not sure what you mean by deducting his pension from his redundancy payout, that's not really clear.

If there's a standard calculation they use all the time and everyone knows it, it may well be contractual even if it's not written.

It's perfectly normal to calculate redundancy pay based on the salary someone is receiving at the time, even if they have been on higher salaries earlier in their career. Calculating his redundancy pay based on his current part time salary wouldn't be discriminatory.

Sorry this isn't more help, it's just not very clear without details of the formula. It's also not clear how his payout is calculated differently. From what you've said, it's calculated exactly the same as everyone else, but because the calculation has come out with him not receiving anything enhanced, the employer have adjusted it to his benefit.

Difficult to know without understanding it better, but it's possible the formula itself may be discriminatory based on age. I can't see that there's been any discrimination based on his part time status from what you've said.

Thanks - I'll try and explain better.
Until the Age descrimination legislation came in (2006?) both retirement and pension age were 60. Post legislation the retirement age became 65 but the pension age remained at 60. So yes he took his pension at 60 but continued to work for the same copany without a break, but on a part time basis.

A formula (undisclosed) had aways been used to calculate enhanced redundancy pay - the same formula is applied to all but the amount was reduced/tapered for those within 3 years of retirement (taking into account their future pension payment) to prevent a "windfall"

The same formula when applied in this case gave a -ive amount because it was not changed to handle those working beyond pension age and because in this case the pension adjustment being based on a his full time salary was greater then the element based on his part time pay {sorry haven't got the exact formula details as they are not published- but can try and get what is believed to be the formula tomorrow }

However he currently works 4 days a week and if his full time pay was used in the formula (as is his fulltime pension) a positive figure would result which could then be adjusted to 4/5.

As it is, effectively no formula has been applied the figure they are proposing is just an ad hoc offer. For all other people being made redundant the standard formula calculation has been applied . (he is currently the only person working beyond pension age)

Having researched EATs - the case Loxleyv BAE systems seems relevant - in the way the formula is initiall applied
Thanks again.

I thought the same formula was applied, but because it came out with your friend getting nothing, they offered something anyway?

If there is a practice that older workers get less than younger workers for redundancy because they happen to be nearing retirement, that sounds like discrimination. I wouldn't focus on whether the offer they made after applying the formula was calculated fairly, and would instead suggest focusing on the fact that the age of the person shouldn't be taken into account in the first place. If younger workers get, say 2 weeks salary per year service, older workers should get exactly the same.

The formula - basically a months pay for every year of service but capped so none can receive > than 3 years pay is applied equally to all except - that for those within 3 years of retirement this is tapered down, so those approaching retirement do not receive a windfall payment ( I believe this is still allowed as an "objective justification") .

The problem is that originally retirement and pension date were the same (60) -but as they are now different; so pension date = 60, retirement date =65, and the formula does not work for those who continue to work beyond pension age. In this case, they have, therefore, offered an arbitrary amount, which is substantially less than he would have been due
a) if the fact that he is in receipt of a pension were disregarded;
b) if the formula had used his full time pay and the pro-rated the calculated amount based on his part-time hours.
So the whole thing seems at the very least unfair - but does it comply with the legal requirements for an enhanced scheme? I'm still not sure - but thanks for the help

Well I'm not convinced that anything that ensured older workers received less than younger workers could be objectively justified, but that's another issue I guess.

There are no rules governing enhanced redundancy, other than the usual requirement not to illegally discriminate.

I think use of the part time salary in performing the calculation is a red herring. It would be perfectly acceptable to use current salary for calculating anything like this, not a previous salary. The problem isn't the lower salary, the problem is the fact that workers staying beyond normal retirement age end up penalised as a result of the formula used. So again that would be a potential age discrimination issue, not a part time working issue.

Thanks again
Pity this seems not to have been re -heard as far as I can see:-

Loxley v BAE Systems Land Systems (Munitions & Ordnance) Ltd - employer's purported justification for age discrimination must always be "critically appraised" to ensure proportionality - EAT 29.7.08
bailii - 31/07/2008
BAE's voluntary redundancy scheme was clearly discriminatory against Mr Loxley on grounds of his age. Because he was 61 he received no enhanced benefits on being made redundant. When the scheme was originally introduced retirement at 60 was compulsory, but that was later changed to 65. However, the redundancy scheme had tapering provisions in place between the ages of 57-60, and was not amended in the light of the retirement age change. An employment tribunal found the discrimination justified, and Mr Loxley appealed.

In the EAT Elias P re-stated the test of objective justification: measures must correspond to a real need, be appropriate with a view to achieving the objectives pursued and be necessary to that end. This involves the application of the proportionality principle - which "requires an objective balance to be struck between the discriminatory effect of the measure and the needs of the undertaking. The more serious the disparate adverse impact, the more cogent must be the justification for it...".

Here the tribunal had simply " not grappled with the question whether it was proportionate to exclude the claimant from any redundancy payment altogether because of his entitlement to a pension...". Preventing a windfall may well be a legitimate aim, and tapering may well be a justified means of achieving it. "However there is always the risk that the parties will have been influenced, consciously or unconsciously, by traditional assumptions relating to age. Hence the reason why any justification relied upon by the employer...must be subject to critical appraisal."

The case was remitted to be reheard by a fresh tribunal.