Employee Awarded £72,000 after Exclusion from Voluntary Redundancy Scheme

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Posted on 02 Apr 2013

An employee who was excluded from a voluntary severance scheme as she was on a career break has been awarded compensation for discrimination equivalent to the full amount of the severance payment.

In HM Land Registry v McGlue, M was a on a career break of up to five years from which she could return on reasonable notice.  Her employer needed to make redundancies and introduced a voluntary redundancy scheme.  M expressed an interest in voluntary redundancy.   When senior managers came to consider who should be accepted, they decided to exclude anyone who was on a career break and was not due to return until after 31 March 2010.  M was excluded on this basis and claimed that this amounted to indirect sex discrimination.

The employment tribunal upheld her claim and awarded her compensation of just under £72,000, being the amount she would have received under the voluntary severance scheme. The employer appealed, arguing that:

  • the £72,000 was a redundancy payment to compensate M for the loss of her job.  Since M remained in her job the whole basis for the payment was undermined and she should therefore receive nothing; and
  • the tribunal should have reduced the compensation to take account of the earnings M received by remaining in post. 

The Employment Appeal Tribunal rejected these arguments. The principle when awarding compensation for discrimination is that the victim should be placed in the position they would have been in had no discrimination occurred.  The tribunal found that had M been able to apply for voluntary redundancy she would have been successful in her application and received the severance payment.  Obtaining work elsewhere would not have affected her entitlement to or the amount of the severance payment and there was therefore no basis on which to offset any future earnings received from remaining in post.

The decision in this case acts as a reminder that excluding certain groups of employees from a voluntary redundancy scheme carries with it the risk of an indirect discrimination claim if the decision impacts adversely on one particular sex, race, age group etc.   Employers taking such a decision will need to be able to justify it, which may not be that easy.  In generous severance schemes, the cost of getting it wrong can be high as this case demonstrates. 

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