The Court of Appeal has confirmed that saving costs in order to balance the books can be a legitimate aim which could justify indirect discrimination, provided the means chosen are proportionate and minimise the discriminatory impact. In contrast, simply saving or avoiding cost on its own will not be a legitimate aim. The fact that cost reduction measures are temporary and subject to review will assist in showing that they are proportionate.
In Heskett v Secretary of State for Justice the probation service had introduced a new pay policy in response to the public sector pay freeze, which slowed pay progression and had a disproportionate impact on younger employees.
A policy which disadvantages those with a protected characteristic will be justified if it is a proportionate means of achieving a legitimate aim; means will be proportionate if they are reasonably necessary, ie, there are no less discriminatory means of achieving the aim and the business needs relied on are sufficient to outweigh the discriminatory impact.
The Court held that merely trying to save costs cannot be a legitimate aim justifying indirect discrimination. However, this can be distinguished from reducing costs in order to balance the books, which is a legitimate aim capable of justifying age discrimination if proportionate. When determining proportionality, it will be relevant if the measures are temporary and subject to review.
Given that all organisations will be subject to budgetary constraints, this decision means that in appropriate cases the main focus will be on showing the proportionality of the means chosen.
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