The claimant in the original proceedings took voluntary redundancy at the age of 26. The rules said that people who were over 30 or 35 would receive more than people under the age of 30. As a 26 year old leaver, with almost eight years' service, the claimant was entitled to a payment of £10,849.04. Had she been over 35 at the time she left, and had served the DWP for an identical length of service, she would have been entitled to a further sum of £17,690.58 under the rules. She asserted that the disparity in the severance payment to which she was entitled as compared with that to which an older worker with an identical length of service would have been entitled was direct discrimination against her on grounds of her age, in breach of The Employment Equality (Age) Regulations 2006 (SI 2006/1031. She brought a claim for discrimination to the ET and lost. The ET held that there were material differences between the age groups, in particular between those below the age of 30 and those above the age of 35, and that the claimant had not been treated less favourably than any comparator over the age of 35 because her circumstances were materially different. Unless they were wrong about that, the ET further held that the treatment of her was a proportionate means of achieving a legitimate aim. The EAT upheld their decision (see Lockwood v Department of Work & Pensions & Anor and the claimant appealed.

The Court of Appeal first considered whether there had been direct age discrimination and held that there had. The purpose of the comparative exercise was to test whether the claimant had been discriminated against on a prohibited ground, in this case that of her age. The relevant comparator must therefore be materially similar to the claimant in all relevant ways except for the protected characteristic. Her comparator was that of an employee over 35 whose term of service had been identical to hers. He or she would receive at least twice what the claimant received and it followed that she was treated less favourably and was so treated because of her age. However, the Court of Appeal found that the respondents had adopted proportionate means to achieve the legitimate aim to produce a proportionate financial cushion for workers until alternative employment is found when balanced against the disparate treatment of younger workers and the appeal was thus dismissed.

__________

Case No: A2/2013/0505

Neutral Citation Number: [2013] EWCA Civ 1195

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL

His Honour Judge Peter Clark, Mr C. Edwards and Mr G. Lewis

Appeal No: UKEAT/0094/12/RN

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 11/10/2013

Before :

LORD JUSTICE RIMER

LORD JUSTICE LEWISON

and

LORD JUSTICE TREACY

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Between :

ROMILLY LOCKWOOD (Appellant)

- and -

(1) DEPARTMENT OF WORK AND PENSIONS

(2) CABINET OFFICE (Respondents)

• - - - - - - - - - - - - - - - - - - - -

• - - - - - - - - - - - - - - - - - - - -

Mr Declan O'Dempsey and Mr Adam Ohringer (instructed by the Equality and Human Rights Commission) for the Appellant

Mr Akash Nawbatt (instructed by *the Treasury Solicitor) for the Respondents*

Hearing date: 4 October 2013

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Judgment

Lord Justice Rimer :

1. This appeal, by Ms Romilly Lockwood, is against the order made on 4 February 2013 by the Employment Appeal Tribunal (His Honour Judge Clark, Mr C. Edwards and Mr G. Lewis, 'the EAT') dismissing her appeal against the dismissal of her claim by the judgment of the London Central Employment Tribunal (Employment Judge Sigsworth sitting with unidentified members, 'the ET') sent to the parties, with reasons, on 3 November 2011.

1. Ms Lockwood's claim before the ET was one of two lead cases in a group of cases in which the claimants challenged the Civil Service Compensation Scheme ('CSCS') on the grounds of alleged age discrimination. The respondents to her claim and appeal are the Department of Work and Pensions ('the DWP') and the Cabinet Office. The DWP is Ms Lockwood's former employer. The Cabinet Office is the department responsible for the implementation and administration of the CSCS.

1. Ms Lockwood represented herself at the ET, but was represented by Mr Ohringer at the EAT, and before us she was represented by Mr O'Dempsey, leading Mr Ohringer. The respondents have at all stages been represented by Mr Nawbatt.

The facts

1. Ms Lockwood commenced her employment with the DWP on 18 October 1999 as an administrative officer in the Benefits Agency. She was aged 18. She stayed in that post throughout her employment but was from time to time given extra responsibilities and specialist duties, and also acted as deputy to her line manager. On 2 April 2007, her position was declared surplus. That was because she had not secured a vacancy in a Benefits Delivery Centre or any other DWP office. On the same day, the DWP announced a voluntary redundancy scheme. Ms Lockwood applied for release under it and her application was accepted. As she was under 50, with at least one year's qualifying service, she was entitled to compensation calculated under the CSCS, which operated across the Civil Service. Ms Lockwood's employment ended on 21 September 2007. She was aged 26.

1. Under the relevant CSCS rules (rules 2.8, 2.8(a) and 2.9(a)), the compensation payable to those taking voluntary redundancy is calculated as follows (subject to a maximum compensation cap of three years' pay):

'(a) one month's pay for each year of service, plus

(b) the lesser of:

(i) one month's pay for each year of service given after 5 years service and

(ii) one month's pay for each year of service given after the employee's 30th birthday, plus

(c) one month's pay for each year of service after the employee's 35th birthday'.

1. As a 26 year old leaver, with almost eight years' service, Ms Lockwood was entitled to a payment of £10,849.04. **Had she been over 35 at the time she left, and had served the DWP for an identical length of service, she would have been entitled to a further sum of £17,690.58 under the rules. She asserted that the disparity in the severance payment to which she was entitled as compared with that to which an older worker with an identical length of service would have been entitled was direct discrimination against her on grounds of her age, in breach of The Employment Equality (Age) Regulations 2006 (SI 2006/1031). She brought a claim for discrimination by an ET1 presented on 18 December 2007. It was heard, together with a like lead claim by a Mr Inglis, over three days in September 2011.

The 2006 Regulations

1. The relevant provisions are regulations 3 and 7:

'3. Discrimination on grounds of age

(1) For the purposes of these Regulations, a person ("A") discriminates against another person ("B") if –

(a) on grounds of B's age, A treats B less favourably than he treats or would treat other persons, or

(b) A applies to B a provision, criterion or practice which he applies or would apply equally to persons not of the same age group as B, but –

(i) which puts or would put persons of the same age group as B at a particular disadvantage when compared with other persons, and

(ii) which puts B at that disadvantage,

and A cannot show the treatment or, as the case may be, the provision, criterion or practice to be a proportionate means of achieving a legitimate aim.

(2) A comparison of B's case with that of another person under paragraph (1) must be such that the relevant circumstances in the one case are the same, or not materially different, in the other.

(3) In this regulation –

(a) "age group" means a group of persons defined by reference to age, whether by reference to a particular age or range of ages; and

(b) the reference in paragraph (1)(a) to B's age includes B's apparent age. …

7. Applicants and employees

(1) …

(2) It is unlawful for an employer, in relation to a person whom he employes at an establishment in Great Britain, to discriminate against that person –

(a) in the terms of employment which he affords him;

(b) …

(c) …

(d) by dismissing him, or subjecting him to any other detriment.'

1. It was agreed at the ET that any discrimination against Ms Lockwood was direct discrimination. The issues were (i) whether she was in materially comparable circumstances to employees aged 35 and above whose employment is terminated (regulation 3(2)); and, if so, (ii) whether the payment of more compensation to those over 35 was justified: that is, whether it was a proportionate means of achieving a legitimate aim (regulation 3(1)).

More facts

1. The Principal Civil Service Pension Scheme ('PCSPS') is the occupational pension scheme for the civil service. The CSCS sets out the tariffs that can be applied when civil servants' contracts are terminated. The PCSPS and the CSCS are both statutory schemes made under the Superannuation Act 1972. Before 1995, the rules relating to compensation now in the CSCS were included within the PCSPS. The PCSPS has recently undergone considerable reform, with the introduction of a new final salary pension scheme in October 2002 and a whole career pension scheme in 2007.

1. The CSCS has not been reformed in line with a like timetable. The terms applicable at the time of Ms Lockwood's departure were little changed from those introduced in 1987, following a review which started in 1983; and the particular compensation terms relating to Ms Lockwood's circumstances dated from June 1972 and were not changed until 2010, which was after her departure. The ET summarised the CSCS as providing:

'… financial protection in the form of compensation to people who lose their jobs prematurely through redundancy or re-organisation, with benefits calculated principally on the basis of length of service, so that all service is rewarded irrespective of age (albeit not always equally); with the "trigger" for compensation being age on the date of departure (rather than age on joining) from the Civil Service'.

1. The ET explained the evidence relating to the compensation terms. The Official and Staff Sides of the National Whitley Council carried out a wide-ranging review of such terms, which led to an agreement of November 1971. Those under 40, or with less than 10 years service, were to be entitled to one month's pay for each year of service, plus (a) a further month's pay for each year of service (save for the first five years of total service) completed between their 31st and 36th birthdays, and (b) a further two months' pay for each year of service completed after their 36th birthday. In the discussions leading to those terms, the Official Side told the Staff Side that the proposals:

'… were designed to be most generous for those whose need was greatest. Those in the earliest part of their career would be likely to find it much easier to get other jobs … the proposals for enhancement between 31 and 36 and at higher rate between 36 and 40 were necessary to achieve a satisfactory balance between those under 40 who received their compensation in the form of a lump sum only and those over 40 who received a continuing payment, having in mind the generally accepted proposition that 40 was something of a watershed and that alternative employment was harder to find for those over that age … the provisions were not intended to be discriminatory in any way, but were simply designed to achieve a satisfactory build up to the age of 40'.

1. The ET explained that a working group that convened to consider what the new terms should be had earlier suggested that the calculation should be based both on age and length of service so as to recognise 'the likely weight of family responsibilities' (that is, the fact that younger workers were less likely to have such responsibilities) and the 'difficulty in finding another comparable job'. The new compensation terms were included in the PSCPS with effect from 1 June 1972, although the terms for mobile staff under the age of 40 had been modified a little and were broadly the same as the severance terms that applied to Ms Lockwood. These benefits were the same as those for employees made compulsorily redundant, although they would also receive six months' notice of dismissal or pay in lieu of notice, the ET finding that such notice, or PILON, was in recognition of the fact that the employee might have been made redundant against his will. The ET said that when changes to the scheme were discussed and made in 1987, and again more recently in 2009/2010, the unions did not seek any change in the early severance rules on the grounds that they were discriminatory on the grounds of age.

1. The ET summarised the evidence of Peter Spain, head of the internal dispute resolution and pensions technical team in the scheme management executive of the Cabinet Office, whose evidence the ET accepted. He referred to the Civil Service ethos. He said that in order to deliver high quality public services, a productive and engaged work force was required. In order to attract, engage and retain high calibre staff, the Civil Service had to offer terms that would both be inviting to prospective staff and act as an incentive to existing staff. This included not only a reasonable package of terms during the period of employment, but generous terms after leaving service. This is part of work force planning. Early termination terms must be attractive, so that individuals volunteer for departure when work force numbers need to be reduced.

1. Mr Spain referred to so-called administrative workability. There are some 600,000 employees across the Civil Service and related bodies who are potentially covered by the CSCS. It is important to ensure that the eligibility criteria and level of benefit applicable to particular individuals are easily understood and administratively workable. There must be what were referred to as 'bright lines'; i.e. rules that can be operated across the Civil Service in order to achieve consistency and operational effectiveness. It is not possible to look at each individual case to determine benefits for each individual; the rules must allocate benefits by reference to clear rules that can be applied with certainty in every case. There were some 34,000 departures on CSCS terms during the period 2005 to 2008.

1. Mr Spain's evidence was that the aim of redundancy compensation under the CSCS is to provide a proportionate financial cushion until alternative employment is found or as a bridge into retirement. The compensation seeks to reward the individual length of service and to provide financial protection that reflects their presumed personal circumstances. The ET further explained his evidence as follows:

'20. … The rules were revised in 1987, so that a continuing payment was paid to those over the age of 50. Mr Spain said the aim of the design of the lump sum compensation payable before that age was that there should be a proportionate build up to the more generous pension terms payable at 40 (then 50). The proportionate build up means that financial protection increases with age. This reflects the fact that younger workers generally react more easily and more rapidly to the loss of their jobs. Mr Spain provided statistics to illustrate turnover in the Civil Service, with higher turnover in the younger age groups; for example, 8.8% up to the age of 24 as against 3.9% in the age group 35-39. The rate levels off for those in their 40s, reaching a low 3.4%, before increasing to its highest point in the age group 60 plus, reflecting retirements at or above normal pension age.

1. Mr Spain also relied on statistics from the Office for National Statistics about the probability of an unemployed individual moving from unemployment to employment and how that varies by age. The ONS found that an unemployed person in the age group 18-24 is 11.2 percentage points more likely to move into employment than someone aged 35-49. Likewise, an unemployed person in age group 25-34 is 8.1 percentage points more likely to move into employment than someone aged 35-49. The General Lifestyle Survey conducted by the ONS in 2009 showed that 5% of those aged 16-24 were married. This increased to 41% of the group aged 25-34, and 59% of the group aged 35-44. The average age at date of marriage in 2007 for women was approximately 34 years of age, and 36 years of age for men. The data produced by the Office of the Deputy Prime Minister in 2002 and by the Council of Mortgage Lenders in 2009 indicates that the average age of first time house buyers was around 32 or 33 from 2002-2007, and had increased to around 37 by 2009. The statistics relating to marriage and property purchases provide an illustration of responsibility that older workers are more likely to have than younger workers, and are consistent with the conclusions about the heavier family responsibilities (and thus greater need) of older workers reached by the working group in 1969, says Mr Spain.

1. Calculations have been done by the Cabinet Office's analysis and insight team. If the age-related element of the calculation of the compensation figures were removed, the cost to the public purse would increase significantly, according to Mr Spain, and in the case of the Claimants would roughly have doubled. In the case of Ms Lockwood, instead of receiving £10,849, she would receive £25,705, a multiple of 2.4. In the case of Mr Inglis, instead of receiving £18,330, he would receive £35,583, a multiple of 1.9. The total cost in the period 2005-2008 was already approximately £337 million. The A & I team were also asked to calculate the average cost if everyone who met the eligibility criteria received a payment calculated using the compulsory early severance provisions without the age references. Across the bands, up until the age of 34, the multiple is roughly 2, reducing to 1.4 from the age of 35. Looking at the staff as a whole, the average compulsory early severance compensation under the old scheme rules with the age references was £37,700 for those eligible to receive it. If the age references were removed, this increased to £43,800, a difference of £6,100.

1. Mr Spain also said that that it was not possible to look on an individual basis at the ease and speed with which an individual might react to the loss of their job when determining their compensation, or at their personal financial position. At an individual level these are unknown quantities, which would be very difficult if not impossible to calculate. Getting individuals to complete questionnaires, for example, would be very resource intensive. Further, they might refuse to co-operate and it would be impossible to know whether the information they were giving was accurate. It was important to ensure that staff across the board were being treated fairly and consistently. It was difficult to see how any form of means testing would be reliable, practical or desirable from a policy point of view. In the case of Ms Lockwood, she told us that she has been cohabiting with her partner for some time and they intend to get married shortly and she shares in the cost of a mortgage. Mr Inglis is married with two young children. Their personal circumstances are therefore more akin to those in the age group above 35'.

The decision of the ET

1. As to the first issue identified in paragraph 8 above, the ET held, in paragraph 27.1, that there were material differences between the age groups, in particular between those below the age of 30 and those above the age of 35. They regarded that as demonstrated by the statistics in evidence, namely the government statistics and those from the ONS and the Council of Mortgage Lenders, which were not contradicted by the claimants' evidence. They held that the evidence showed that individuals in the younger categories and in their twenties, who had lesser financial and family obligations, could generally be expected to react more easily and rapidly to the loss of their jobs and greater flexibility could be expected of them. They were also more likely to move into employment than older people. The ET's conclusion was, therefore, that, in the language of regulation 3, Ms Lockwood had not been treated less favourably than any comparator over the age of 35 because her circumstances were materially different from his. There was, therefore, no discrimination against her on the grounds of her age.

1. If right on that, there was no need for the ET also to consider the second issue identified in paragraph 8 above, namely objective justification. That would only have arisen if, for the purposes of regulation 3, Ms Lockwood's relevant circumstances were found to have been comparable to those of her comparator and she had suffered less favourable treatment. In that case, the question for the ET would have been whether the treatment of her was a proportionate means of achieving a legitimate aim. In case, however, it was wrong on the first issue, and Ms Lockwood had been treated less favourably than her comparator, the ET also considered that question. It answered it in the affirmative.

1. The ET's conclusion was that the aim of the CSCS was to produce a proportionate financial cushion until alternative employment was found, or as a bridge to retirement and the receipt of a pension; and the means of doing so by way of staged payments and a banding process was a legitimate aim. Everyone benefited from it, with the older employees simply benefiting more than the younger ones. The ET was satisfied that the respondents adopted proportionate means to achieve the aim. The methods of implementation were reasonably necessary, and were sufficiently robust to counter any argument that might be raised on the question of substantial disparity of treatment.

1. In elaboration, first, administrative workability required the use of clear cut bands so that everybody knows where they are. It was not appropriate to take individual circumstances into account, and the staged scheme was an appropriate and transparent one. Other age bands could have been chosen, but it could not be said that the bands that were chosen were inappropriate or disproportionate. Second, to pay everybody the sum paid to older employees would be a substantial burden on the public purse, although it would of course have been cheaper to level the scheme down and treat everyone equally. Third, the statistics supported the view that younger employees suffer unemployment for a shorter time and have fewer family and financial responsibilities. Fourth, the considerations of workforce recruitment and planning supported the conclusion that it was legitimate to have the scheme in place. Fifth, the respondents had established cogent business aims, and proportionate means of implementing them, which outweighed the discriminatory effect of the measures. Sixth, it was significant that the unions had not argued that the scheme was discriminatory, or sought to challenge it on such a ground.

The decision of the EAT

1. Judge Clark, delivering the reserved judgment of the EAT, gave short reasons for upholding the ET's decision that the circumstances of Ms Lockwood's case were not the same as, or were materially different from, those of employees over the age of 35 and that therefore no question of objective justification arose. He said that the question was whether the difference between the claimant and the comparator was material for the purpose in hand, and he referred to the dissenting speech of Lord Nicholls of Birkenhead in Barry v. Midland Bank Plc [1999] ICR 859 and the Opinion of Advocate General Eleanor Sharpston QC in Lindorfer v. Council of the European Union (C-227/04) *[2009] AER (EC) 569. He said also that the comparator question is one of fact and degree, drawing on the speech of Lord Hope of Craighead in [Hewage v. Grampian Health Board ]()*[2012] UKSC 37; [2012] ICR 1054, at paragraph 22. In this case, the ET had made an evidence-based decision showing that the purpose of the different payments was to reflect the comparative difficulty of loss of employment suffered by older workers when compared with those in the younger age group.

1. The EAT nevertheless also considered the challenge to the ET's decision on objective justification, and held that the ET was entitled to conclude, as it did, that the factors it had identified amounted to proportionate means to achieve the respondents' legitimate aim of producing a proportionate financial cushion for workers until alternative employment is found when balanced against the disparate treatment of younger workers.

1. In this context, the EAT also considered whether the objectives of the respondents' policy under scrutiny were legitimate objectives of a public interest nature within the meaning of EC Directive 2000/78, which had been transposed into domestic law by the 2006 Regulations. This was a consideration identified by Baroness Hale of Richmond in the decision of the Supreme Court in [Seldon v. Clarkson Wright and Jakes ]()[2012] UKSC 16; [2012] ICR 716, at paragraphs 49(7) and 67. This issue had not been considered by the ET, since at the time of its decision Seldon had not been decided by the Supreme Court. Judge Clark's conclusion was that the ET's findings provided sound reasons for a conclusion that the respondents had demonstrated legitimate aims according with Article 6(1) of the Directive. Judge Clark relied in particular on the observations of Lord Hope in Seldon, at paragraphs 73 and 75, and of Baroness Hale, at paragraph 67. As for the ET's reasons, he referred in particular to paragraph 27.2(5), which was the paragraph in which the ET expressed their view that the objectives of the scheme were directed at a legitimate aim.

The appeal

1. Mr O'Dempsey submitted that the ET's decision was wrong on both issues. He said that the ET: (i) misapplied regulation 3(2), and was wrong to find that Ms Lockwood did not suffer less favourable treatment; and (ii) applied an incorrect test of justification under regulation 3(1), ignored material considerations in considering the justification question and took irrelevant factors into account. I shall deal separately with each issue.

(i) Were Ms Lockwood's circumstances materially different from that of her comparator?

1. By reference to regulation 3(2), Mr O'Dempsey submitted that the ET was wrong to conclude that there was a material difference between the age groups 'under 30' and 'over 35' on account of differences in working flexibility and financial commitments. Such differences were exclusively referable to factors of age, whereas under the Regulations age is, to adopt the shorthand of the Equality Act 2010, the 'protected characteristic'.

1. The purpose of the comparative exercise is to test whether the claimant has been discriminated against on a prohibited ground, in this case that of her age. The relevant comparator must therefore be materially similar to the claimant in all relevant ways except for the protected characteristic. Otherwise the comparison is not a valid one. In this case the comparison was a valid one because Ms Lockwood's case and that of her comparator were in the relevant circumstances the same. Her comparator was that of an employee over 35 whose term of service had been identical to hers and had agreed to a release from his employment with the DWP under the CSCS. He or she would receive at least twice what Ms Lockwood received. It followed that she was treated less favourably and was so treated because of her age.

1. The ET's error was to factor into the comparison exercise considerations that were either directly related to Ms Lockwood's age, or were consequent upon, linked or connected to her age, and then to treat those considerations as part of the 'relevant circumstances' for the regulation 3(2) comparison purposes. Having done so, it concluded that Ms Lockwood's case was materially different from that of her comparator. That is because, unlike him, she was in an age group the members of which, as the ET held, 'can generally be expected to react more easily and more rapidly to the loss of their jobs and greater flexibility can, in general, be expected of them given their lesser family and financial obligations' (ET reasons, paragraph 27.1). In Mr O'Dempsey's submission, it was wrong in principle for the ET to take those matters into account in the comparison exercise. Their only relevance was in relation to objective justification if less favourable treatment was first found; but not in the determination of whether there was any less favourable treatment.

1. Mr Nawbatt defended the ET's approach on the basis that it was, he said, legitimate for it to take account of what I shall call 'justification facts' in its determination of the regulation 3(2) comparison exercise. He relied upon the same authorities that he had put before both the ET and the EAT. He invoked assistance, first, from the Opinion of Advocate General Sharpston QC in Lindorfer's case. At paragraph 20, the Advocate General embarked on a discussion under the heading 'Applicability of the general principle of equal treatment', and said:

'21. The general principle of equal treatment, or prohibition of discrimination, has consistently been defined as requiring that comparable situations must not be treated differently and different situations must not be treated in the same way unless such treatment is objectively justified.

1. That definition implies a two-stage analysis. First, are the situations comparable, so that they call for the same treatment, or are they different, so that their treatment should be differentiated? Second, if the two situations are not treated as indicated by the answer to the first question, is there objective justification for the divergence?

1. In practice, however, there may be some blurring between the assessment of characteristics which differentiate situations and the assessment of objective justification for differentiated treatment of otherwise comparable situations (or for uniform treatment of otherwise different situations'.

1. Mr Nawbatt relied upon the tentative wording of paragraph 23 in support of the proposition that it was legitimate for the ET to invoke justification facts in answering the anterior question of whether Ms Lockwood's 'relevant circumstances' were the same as those of her comparator. We were not referred to the judgment of the Court of Justice of the European Union ('CJEU') in Lindorfer, which we were told shed no light on the point.

1. Mr Nawbatt relied next on paragraphs 2 to 4 of the judgment of Baroness Hale of Richmond in Seldon's case. I do not quote them, since they provide no support for Mr Nawbatt's proposition. Their essence was simply to explain that age is a 'relative newcomer' to the catalogue of protected characteristics and that age discrimination, including direct discrimination, is justifiable on a range of grounds that would not justify direct discrimination on the ground of any other protected characteristic. Lady Hale explained that the reason for that is because age is different. That is because, unlike other protected characteristics, it is a continuum that changes over time; and in case anyone had any difficulty with grasping that, Lady Hale helpfully cited a dictum of Lord Walker of Gestingthorpe in R (Carson) v. Secretary of State for Work and Pensions [2006] 1 AC 173, paragraph 60, explaining man's inability, from infancy onwards, to stop the passage of the years.

1. Mr Nawbatt also relied on Barry's case, in which the question was whether a redundancy severance payment calculated by reference to length of service and termination salary indirectly discriminated against a woman whose service comprised 11 years of full-time work followed by 2.5 years of part-time work. The majority held that the severance arrangements, which applied equally to all employees, both men and women, were paid under a scheme having the legitimate object of cushioning employees against unemployment and involving no relevant difference in treatment between full and part-time workers for the purposes of the Equal Pay Act 1970 and Article 119 of the EEC Treaty. Mr Nawbatt did not explain to my satisfaction how the decision in Barry is of any relevance to the present case. The scheme in Barry involved no distinction between men and women, or any distinction based on age.

1. Mr Nawbatt also relied on the recent decision of the CJEU in Odar v. Baxter Deutschland GmbH [2013] 2 CMLR 13. He referred us to paragraphs 59 to 62 of the judgment of the court, which I also do not cite. That is because I also derive from it no guidance to the effect that, for the purposes of the regulation 3(2) comparison exercise, the 'relevant circumstances' of the case include any justification facts.

1. Finally, Mr Nawbatt referred us to Hewage's case (not an age discrimination case), in which Lord Hope of Craighead, at paragraph 22, said that whether the situations of the claimant and her comparators were comparable 'was a question of fact and degree, …'. I do not of course question that. But it tells us no more than that, if the ET's findings of fact in relation to the comparative exercise were as to matters that it could legitimately bring into account, then, in ordinary circumstances, their findings will be the last word on the subject.

Discussion and conclusion on issue (i)

1. The language of regulation 3(2) tracks the like language of section 5(3) of the Sex Discrimination Act 1975 and section 3(4) of the Race Relations Act 1976. It similarly requires a comparison between the treatment received by the claimant and that which was, or would have been, received by an actual or hypothetical comparator. For the purposes of the comparative exercise, the 'relevant circumstances' must be 'the same, or not materially different'. In Shamoon v. Chief Constable of the Royal Ulster Constabulary [2003] UKHL 11; [2003] ICR 337, to which Mr O'Dempsey referred us, Lord Scott of Foscote said, at paragraph 110:

'In summary, the comparator required for the purpose of the statutory definition of discrimination must be a comparator in the same position in all respects as the victim save only that he, or she, is not a member of the protected class'.

1. In a race discrimination case, that means that if a black complainant is alleging discrimination at work on the ground of his race, the comparator will usually be a white person who is otherwise in the same, or a not materially different, position. It is obvious that once such a comparator has been identified, the tribunal cannot hold the 'relevant circumstances' of the two cases to be different on the ground that the comparator is white and the complainant is black and so regard the comparison as invalid. The whole purpose of the comparison is as an aid to seeing whether or not the way in which the comparator was, or would have been, treated in the relevant circumstances supports the claimant's allegation that he was subjected to less favourable treatment on the ground of the protected characteristic.

1. The present case is not one of alleged race discrimination, but of alleged age discrimination. There was no difficulty in identifying a comparator, namely someone over 35 who was, or would have been, otherwise in all material respects as regards his or her employment in the DWP in the same position as Ms Lockwood. For the ET then, however, to have held that the respective circumstances of the, say, 36 year old comparator and the 26 year old Ms Lockwood were materially different, so that Ms Lockwood failed to show less favourable treatment as compared with her comparator, was wrong.

1. First, Ms Lockwood's age of 26 did not make the relevant circumstances of her case materially different from that of the comparator. Her case was that it was because of her age that she was being discriminated against. Just as a comparison between a black claimant and a white comparator is not invalidated because of their difference in race, so the comparison between the 26 year old Ms Lockwood and the 36 year old comparator was not invalidated either. On the contrary, the comparison was relevant, valid and essential for the purposes of answering the question whether or not Ms Lockwood had suffered less favourable treatment on the ground of her age.

1. Second, once the comparison was made, there was only one answer to the question whether she had suffered such less favourable treatment, namely yes. That is because, upon leaving her employment, she was paid substantially less money than was or would be paid to someone whose circumstances, age apart, were identical. The ET, however, rejected this straightforward conclusion. It instead approached the case by bringing into account in its assessment of the relevant circumstances the fact that, because Ms Lockwood was younger than the comparator and belonged to a generation whose members could adjust more easily and rapidly to the loss of jobs than their colleagues in their late thirties, her circumstances were materially different from those of the comparator.

1. Those considerations were, however, nothing more than features of being 26 rather than 36. The ET's reasoning appears to have been that, because a 26 year old leaver can be assumed not to need as much money as a 36 year old leaver, there was no less favourable treatment in giving the former a lower severance payment than the latter. Even if the premise was correct, the conclusion was self-evidently wrong. The premise, if right, may have provided grounds for justifying the disparity of the treatment between the different age groups. But that was a different question. There was, however, no question that Ms Lockwood suffered less favourable treatment than her comparator. The ET ought so to have found, and the EAT was wrong in failing to correct its error.

1. I would therefore accept Ms Lockwood's case on the first ground of appeal.

(ii) Was there objective justification for Ms Lockwood's less favourable treatment?

1. In case it was wrong on the question of less favourable treatment, the ET also considered whether such treatment was a proportionate means of achieving a legitimate aim. The ET held that it was and so the claim failed. Mr O'Dempsey also challenged the ET's conclusion on justification. On this aspect of the case, I consider that Ms Lockwood has much greater difficulty.

1. In his written argument, Mr O'Dempsey submitted that the ET did not consider whether the measure in question was appropriate and reasonably necessary with regard to its aims. Nor did it scrutinise the claimed justification with sufficient rigour. The Supreme Court's guidance in Seldon's case and [Chief Constable of West Yorkshire Police v. Homer ]()[2012] UKSC 15; **[2012] ICR 704 required justification to be considered in a structured way by: (i) setting out the aims of the policy; (ii) considering whether the policy is appropriate with regard to its aims; and (iii) considering whether the policy was reasonably necessary with regard to its aims. The ET's justifications of the scheme were largely in the nature of arguments in support of its aims. It considered whether the aim was sufficient to justify the policy, but not whether the policy was appropriate and reasonably necessary.

1. More particularly, the ET failed to consider the magnitude of the impact of the differential treatment in financial terms on younger employees. Put the other way, even if it was legitimate to award a higher redundancy pay to older employees, the ET did not consider whether its magnitude was appropriate or reasonably necessary to achieve that aim. Mr O'Dempsey referred us to Lady Hale's observation in Homer's case, at paragraph 24:

'Part of the assessment of whether the criterion can be justified entails a comparison of the impact of that criterion upon the affected group as against the importance of the aim to the employer'.

1. Mr O'Dempsey also submitted that the ET's reasoning on justification took irrelevant matters into account. First, the ET found that the increased cost of paying younger employees as much as older ones was a justification for their less favourable treatment, whereas the scheme could have been made non-discriminatory without extra cost, by levelling down the compensation (although Ms Lockwood's case was advanced on the basis that her compensation should have been levelled up). Second, the ET relied on the statistics, but although these may have pointed to an aim of the policy, they did not help in identifying whether it was proportionate and necessary: the ET was confusing the aim with the means. Third, the ET found that someone who starts work in the Civil Service at 20 is less likely to view the job as a long term career, as against someone who starts at 35. It is said there was no evidence of this and that it was irrelevant to the question of justification.

1. Mr O'Dempsey developed his points orally, apart from those referred to in paragraph 43 above. The part of the argument so developed was raised by ground 2 of Ms Lockwood's grounds of appeal. That asserts (i) that the ET applied the wrong test of justification, and did not consider, as it should have done, whether the measure in question was appropriate and reasonably necessary with regard to its aims; and (ii) that it did not scrutinise the suggested justifications with sufficient rigour appropriate to cases of direct discrimination. Whilst Underhill LJ gave permission to appeal on all grounds, he was presumably not aware of what we were told during the argument, namely that point (ii) was not a permitted ground of appeal before the EAT (although apparently it was raised in Ms Lockwood's skeleton argument for the EAT), nor is there any reference to it in Judge Clark's judgment in the EAT. Since appeals to this court against decisions of the EAT lie only on questions of law (see section 37 of the Employment Tribunals Act 1996), Mr O'Dempsey has to show that the EAT was in error in failing to identify the alleged lack of rigour.

1. As it is obscure whether, or if so to what extent, the point was argued before the EAT, I do not follow how it can be said that the EAT was at legal error in failing to deal with and accept it. On the other hand, as Mr O'Dempsey submitted in his reply, the requirement of rigour can perhaps be regarded as part of the way in which the ET is required to apply the relevant test in relation to the proportionality exercise and so, albeit with some hesitation, I would not rule this part of the grounds of appeal out of court.

1. As regards the applicable test, the heart of the question is whether the discriminatory scheme is a proportionate means of achieving a legitimate aim (see regulation 3(1)); and the judgment of the EAT delivered by Elias J (the President), as he then was, in MacCulloch v. Imperial Chemical Industries plc [2008] ICR 1334, paragraphs 10 to 20, provides comprehensive guidance as to the application of that test and the rigour with which tribunals must apply it. The ET was referred to MacCulloch and correctly summarised its essence in paragraph 24. It was also referred to the EAT's decision in Loxley v. BAE Systems Land Systems (Munitions & Ordnance) Ltd [2008] ICR 1348, in particular to paragraph 42 in which Elias J referred to the fact that an agreement made with trade unions is potentially a relevant consideration when determining whether treatment is proportionate; and in this case the ET did regard the trades unions' agreement to the CSCS as significant.

1. A main thrust of Mr O'Dempsey's oral submissions was to the effect that the CSCS scheme did not take adequate account of the fact that there will be those in their twenties who may not be married, but will be co-habiting (as Ms Lockwood is), and will or may have family and financial obligations comparable to their older work colleagues. The scheme did not, therefore, give adequate consideration to the interests of people in this class and was not structured in a way that fairly recognised their interests. It was also said that Mr Spain's evidence of how young people in their twenties would react to unemployment was no more than an assumption; that he drew inferences from the statistics that were not justified; and that his inferences involved a stereotyping of young people that was also not justified. The ET's error was that it failed to scrutinise his evidence sufficiently or, therefore, properly to assess the proportionality of the scheme. It failed to evaluate the degree of disparity of treatment between the different age groups. It failed to consider alternative schemes that might have been adopted. Its reasoning was flawed by a lack of analysis.

Discussion and conclusion on the 'objective justification' issue

1. Judge Clark, in the EAT, was summarily dismissive of the criticism of the ET's disposition of the justification question. He said:

'14. … we are not persuaded by Mr Ohringer that the factors taken into account by the ET at para 27.2 are other than relevant factors entitling them to conclude that the Respondents adopted proportionate means to achieve the legitimate aim of the Respondents to produce a proportionate financial cushion for workers until alternative employment is found when balanced against the disparate treatment of younger workers'.

1. Despite Mr O'Dempsey's sustained argument, I agree with Judge Clark that there is no substance in the challenge to the ET's reasoning upholding the respondents' objective justification case. The ET's reasons were manifestly full and conscientious. There is no doubt that the ET understood the applicable test; it gave the most careful consideration to the evidence; and it applied the test with obvious care and, in my view, appropriate rigour. Mr O'Dempsey accepted that in approaching the establishment of a scheme such as this, one directed at applying a limited pot of money towards meeting what the employer assesses to be the differing needs of former employees at different ages, it was necessary to adopt a banding approach that would involve disparate treatment between employees of different ages. The ET also recognised this, just as it recognised that a different banding scheme might have been promoted, but held that on the statistical evidence it had heard the banding actually adopted was neither disproportionate nor inappropriate.

1. As to the point that the scheme and the ET had insufficient regard to the likely family and financial responsibilities of co-habitees in their twenties, I regard this as unfounded. The ET was well aware of the personal circumstances of both Ms Lockwood and her co-claimant, Mr Inglis, saying in paragraph 23 that their circumstances were therefore more akin to those in the age group above 35. But it also accepted Mr Spain's evidence that it was not practicable to assess severance payments on an individual basis, by reference to the circumstances of each case, and so a banding scheme was instead adopted. It is obvious that no such scheme will achieve absolute justice across the board, but having considered the statistics and Mr Spain's evidence, the ET said, at paragraph 27.1:

'… We conclude that such statistics, on a balance of probabilities, are sufficient to demonstrate a material difference between those who are below the age of 35 and those who are above it. Individuals in the younger categories and in their twenties can generally be expected to react more easily and more rapidly to the loss of their jobs and greater flexibility can, in general, be expected of them given their lesser family and financial obligations. The higher turnover of employees in the different age categories, referred to in our findings, illustrates this. Also the statistics support the contention that younger people are more likely to move into employment more easily than other people. So far as financial commitments are concerned, then in 2007, the year with which we are concerned, the average at date of marriage was 34 for women, and 38 years for men. Ms Lockwood makes the point that the statistics show that many people conhabit at younger ages. However, she has not provided evidence to show that such cohabitees have onerous financial commitments, such as mortgages and children, to the same degree as those who are married. First time house-buyers are more likely to be over the age of 30 than under it, and probably over the age of 35'.

1. In my view, the ET was entitled to be satisfied on the evidence that the position of cohabitees in their twenties was reflected in the statistics before them and that they did not represent some special class whose presence operated to skew the statistics.

1. The ET in this case, as in most cases, was deciding an adversarial contest between opposing parties. It was no part of its function to step into the arena and assume an inquisitorial role in its inquiry as to the question of proportionality raised by regulation 3. It had to deal with that issue on the basis of the evidence before it. It may be that in some cases the outcome of the ET's scrutiny of the evidence will be that it will not be satisfied that the employer has discharged the burden of proof in relation to the proportionality question. That is not, however, Ms Lockwood's case, since all she is asking for is a remission of the case to the ET for a re-consideration of the proportionality exercise. Any such re-consideration would be on the same evidence, and so it is apparently no part of her case that it was not open to the ET to accept the justification argument, as it did. Unless there is very good reason for it, such remissions should be avoided. I consider that there is no justification for any remission to the ET in this case.

1. The ET's task was carefully to assess, or scrutinise, the evidence before it in the course of deciding whether the employer had discharged the burden of showing the disparate treatment of employees in different age groups was a proportionate means of achieving the aim underlying the CSCS. It carried out that exercise and held that it was. In my judgment, there is no justifiable basis for any conclusion other than that it was entitled to be so satisfied.

1. Finally, as to Mr O'Dempsey's points that the ET took irrelevant matters into account, I would reject them. The ET did have regard to cost, and noted that the scheme could have been made non-discriminatory at no extra cost by a levelling down across the board. That does not, however, mean that the chosen scheme was a disproportionate means of achieving a legitimate aim, and the ET held that it was not. Second, the ET did rely on the statistics, which were highly relevant in the assessment of the proportionality of the scheme, but there is no substance in the assertion that it confused aims and means. It carried out the required balancing exercise. Third, as to the point based on the ET's statement that '… someone who starts work in the Civil Service aged 20 is less likely to view the job as a long term career, as against someone who starts at the age of 35', it was either justified by the statistics as to the turnover of employees up to the age of 24 (8.8%) as compared, for example, with that of employees aged 35 to 39 (3.9%), or else was within the specialist knowledge of the lay members of the ET. But even if it was an irrelevant consideration, it was plainly not materially contributory to, let alone decisive of, the ET's overall conclusion as to the proportionality of the CSCS.

1. I would dismiss the appeal.

Lord Justice Lewison :

1. I agree that the appeal should be dismissed for the reasons given by Lord Justice Rimer. However, because we are differing from both the ET and the EAT on the first issue, I add a few words of my own on that issue.

1. When she left her job Ms Lockwood received less money than a 36 year old would have received. Why? The answer is: because she was younger. The ET said that the statistics showed that someone like Ms Lockwood would be able to react more easily and rapidly to losing her job than a 36 year old. Why? The answer again is: because she was younger. They also said that someone like Ms Lockwood would be less likely to have heavy financial responsibilities than a 36 year old. Why? The answer yet again is: because she was younger. Accordingly all the suggested reasons for concluding that Ms Lockwood did not suffer age discrimination turn out to be factors consequent upon her age. They are, therefore, not legitimate differences for the purpose of deciding whether discrimination has taken place.

1. Unusually, and by contrast with other forms of discrimination, direct discrimination on the ground of age is capable of being objectively justified. If it is justified, it is not unlawful. I agree with Lord Justice Rimer that the factors on which the ET relied were only relevant to the question of objective justification rather than to the question whether there was any discrimination in the first place. I also agree with him, for the reasons that he gives, that the ET were entitled to conclude that the discriminatory treatment of Ms Lockwood had been objectively justified; and that the appeal should therefore be dismissed.

Lord Justice Treacy :

1. I agree with both judgments.